The home loan market is a competitive one which spoils the borrower for a lot of choices. No one likes opting for a loan but in the current era, it is almost impossible to purchase a residence without the help of a financial loan. So to ease the financial burden if one has opted for a home loan, many of them prefer the option of a home loan transfer. One switches to the side where they are being benefited in monetary terms.
So, for your better understanding, home loan refinancing is a process where your existing loan amount is paid off by taking a new loan. This facility is opted for when people come across a better deal where the interest rate is usually low, or the loan tenure is more. The whole home loan transfer process is quite easy and smooth if you know exactly what you are looking for.
What is a home loan?
It is a credit facility provided by Banks and Non-Banking Financial Companies (NBFCs) to those planning to buy a home or land, build a house on their land, or renovate their home and maintenance needs.
Each month, a fraction of the principal amount, along with the interest, is paid through Equated Monthly Installments (EMIs). Also, one gains complete ownership of the property after the loan tenure ends.
Note: Both the interest and principal components qualify for a tax deduction.
What is a home loan transfer?
This process is moving your home loan from one lender to another for a better interest rate and various other kinds of benefits. It is a well-known fact that one goes for this process due to certain conditions like rising expenditures and inflation.
When one is burdened with a loan, a high-interest rate directly impacts personal finance, ultimately leading individuals to opt for a home loan transfer process. This process makes sense, especially if one has a longer tenure left to repay.
How to successfully transfer your home loan?
Negotiation of Interest Rate.
Once you plan for a home loan transfer, you should negotiate with your existing lender to lower down the rate of interest. It is highly likely that if you have a loyal relationship and have paid all the EMIs on time, they may consider your negotiation request. But this request will be considered after factors such as your credit history and loan repayment capacity are analysed first.
Get all documentation in one place.
Before initiating the home loan transfer process, ensure that you have all the documents required in one place so there are no hurdles in the entire process. You can also get in touch with your current lender and get a written assurance that they will hand over all original documents to the new lender within a specific period.
Ensure a longer tenure is left.
If another lender is offering you a lower interest rate, transfer the loan only if you have a long repayment tenure left. This is because only then you’ll be able to make savings on the interest outgo. In addition, a home loan transfer doesn’t make sense if you have only two to three years left. This is because you may also need to bear a processing fee and other miscellaneous charges.