A home loan balance transferis a process of shifting your existing home loan to another financial institution. This facility is generally used when the borrower finds lower interest rates at a different financier. Nowadays, many financial institutions offer home loans at lucrative interest rates. This has proven to be a golden opportunity for many borrowers who want to switch banks or lenders to repay their principal loan amount at an interest rate that is more budget-friendly.
Although home loan balance transfer gives you a chance to save money, the process may sometimes come with roadblocks, some of which are given below.
When you apply for a home loan balance transfer, your lender will always take a cautious approach and will ask you to furnish an extensive list of documents. Once you have submitted your documents, there will be scrutiny, which is time-consuming as well as a complicated process. Hence, it is always recommended that before going on-board with a lender for a loan transfer; you should ask yourself whether the transfer will be more beneficial than the effort you will put in transferring the loan itself or not.
One-sided risk for the lender
There is always a chance of your loan application being rejected by your lender as no real advantage will be leveraged by the lender. You might get a lower interest rate, but your lender will have to carry the risk. There will not be any transfer of ownership to the lender, which might make the deal insignificant for the lender in question.
Problems created by the previous lender
Sometimes, your current financial institution that is losing one of its valuable customers might create some obstacles in the way to delay your departure. This could affect your plans as it is obligatory to obtain a ‘No Objection Certificate’ (NOC) from your current lender before applying for a transfer. Only with this certificate from your existing lender, you will be able to transfer your loan to a different lender.
Signing fees could be involved
Your new lender will consider you a new customer, which is why along with re-doing the whole loan procedure, your lender might charge you a fresh processing fee as well. This fee varies from lender to lender. This fee is one of the main factors that you should consider while applying for a home loan balance transfer. Make sure that you have enough balance to pay the fee that will be incurred.
Consent of co-borrower might be required
Remember to verify with your new lender whether the co-borrower’s approval is needed to transfer the loan or not. In some cases, there might be a need for the co-borrower to be present for the formalities.
Your new lender will take into account your CIBIL score, age, history of previous loans, repayment records, etc. before processing the home loan balance transfer. Before making your final decision, always make sure that the new terms and conditions that are offered are beneficial for you.
If you think that you are paying a huge interest rate on your home loan with your current lender then it’s time to think of other available options. Tata Capital offers home loan from another financial institution at competitive interest rates. Tata Capital also provides easy home loans at attractive home loan interest rates. When applying with us, check your home loan eligibility and monthly payments with our home loan EMI calculator. Our home loan calculator can help you get an estimate of the EMI which will help you in sorting out your finances. So what are you waiting for? Visit us today to know more.