Steps To Switch Your Home Loan - Home Loan Blog - Tata Capital

Already have a Home? Steps to switch your Home Loan

Mar 08, 2017

So you have already purchased a house using property loan? Congratulations! You are among the very few who have realized their dream of owning a house. But with RBI cutting policy rates on a regular basis now, its possible that you are not happy paying interest at old higher rates. It might then be in your financial interest to evaluate the option of transferring your home loan to another housing finance institution offering lower rates.

But, note that just having a lower rate does not mean that you should transfer your loan to a new lender. You need to carry out a comprehensive cost benefit analysis. For that, you need to check the foreclosure charges of your existing bank. Also keep in mind that new bank will have its own home loan eligibility criteria for you. Additional charges like processing fees, legal charges, stamp duties, valuation fee, etc. might also be charged by the new bank. Take all these costs into account and compare with the benefit of reduced interest outgo over the entire loan tenure.

Once you have decided that you do want to transfer your home loan, you need to take the following steps:

Firstly, submit an application to your current bank requesting transfer of loan to another bank. Bank will then provide a NOC along with a statement of your outstanding loan amount.

It's possible that at this stage, your bank might consider making you a counter offer with lower rate. You can evaluate their offer and if attractive, can even decide to accept it and not transfer the loan. Staying with the old bank saves a lot of time and effort and if they are ready to renegotiate the rates in your favor, there is nothing like it.

But if you do decide to transfer the loan, then submit these documents, along with complete application to the bank you wish to transfer the loan. Once new bank completes its due diligence (which includes credit appraisals, legal verification of property, technical evaluation, etc.) and approves your application, it will sanction the loan amount to your old bank for closure of existing loan account.

Once financial part is over, the original property papers will be handed over to the new bank. You will now experience the benefit of this transfer as your EMIs or loan tenure would be reduced due to lower rates being charged on the loan.