Find your home loan interest rate a bit too high? Not happy with the tenure? Can’t foreclose your loan? Well, why remain in an unfavourable lender-borrower relationship when you can now transfer your loan balance to another lender with an early home loan transfer. Many lenders offer this benefit today, allowing consumers to escape unfriendly loan terms.
The only drawback? The process involves paperwork, and you may even have to pay some penalties. As they say, the first step to solving a problem is knowing all about it. So, here’s a comprehensive guide on loan transfer charges to help you plan for them better.
What are home loan transfer penalties?
If you wish to home transfer your loan to another lender, your current lender will levy home loan transfer charges. Usually, these include processing fees, administration charges, application fees, inspection fees, prepayment charges, etc., depending on your lender. When rounded up, prepayment penalties alone can be anywhere from 1% to 3% of the loan amount on fixed interestrates.
Why do lenders levy transfer charges?
Essentially, lenders want to keep a long-term lending relationship with you. So, to prevent home loan transfers to other banks, they apply high charges on loan transfers.
Now, if you’re already tackling unbearable EMIs, paying these penalties can further compound the burden. Hence, it’s essential that you evaluate whether a home loan transfer is a wise choice. Let’s discuss how you can do that.
Additional Read: Important Things to Consider Before Transferring Your Home Loan
Deciding if the charges are worth transferring your loan
The best way to assess the viability of a home loan transfer is to calculate whether you’re gaining or losing. If you’re spending more in covering transfer charges than saving from the reduced home loan rates, then it’s best to stick with the current lender. However, if the converse is true, you should go for a transfer.
Plus, it also depends on what you prefer – lump-sum payment or instalments. If you wish for lower EMIs, even if you’re losing money in paying transfer charges, then a home loan transfer is, again, a good choice.
Some lenders also provide a home loan balance transfer calculator on their website. This helps you estimate how much money you can save by transferring the loan to a new lender.
Additional Read: Check out Benefits of Home Loan Balance Transfer
The benefits of transferring your loan to a different lender depend on two factors – the transfer charges of your current lender and the interest rates of the new one. Needless to say, choosing the right lender to refinance your loan is crucial!
If you’re planning on refinancing your home loan but haven’t zeroed in on a new lender already, consider switching to Tata Capital. On transferring your balance home loan, you get competitive home loan interest rates, options to extend your existing loan amount and tenure, nominal processing fees, and even top-up home loan options as required.
We even have a home loan EMI calculator to help you find the best loan turn according to your needs. Switch to Tata Capital today for hassle-free loan repayments.