Wondering if you should transfer home loanto lower the EMI burden? You’re not alone! With many lenders offering attractive lending options at competitive rates, paying hefty instalments makes no sense. Nonetheless, transferring your loan is a major financial decision that can affect your loan repayment plans significantly.
That’s why knowing what you’re getting into beforehand is so important. Here are a few things you should consider before transferring your home loan.
1. Check if your current lender allows balance transfer to a new lender
Before considering a loan transfer, read your loan agreement stating the terms and conditions carefully, as some lenders have special clauses restricting the balance loan transfer. If this is the case, you may not be able to switch lenders without breaching the agreement.
2. Don’t switch lenders in the middle
Switching your lender in the middle of your tenure brings with it application processing fees and other miscellaneous charges. While they seem nominal, these can pile up and cost as much as multiple EMIs. So, if your goal is to save up on funds by availing of lower home loan interest rates on loan transfer, it may be counterproductive to switch lenders close to the end of your term.
Additional Read: Check out Benefits of Home Loan Balance Transfer
3. Check your EMI repayment record before applying for a transfer
Your EMI repayment record will give the new lender an idea of your loan repayment ability. So, make sure all your dues are cleared timely, and these documents are up to date before applying for a loan transfer.
4. Do thorough research before finalising a lender
This involves checking a lender’s credibility, interest rates, and terms of thehome loan transfer process. You want to get a loan from a lender having no history of controversies. Start by going through their website, customer reviews, and testimonials to get an idea of their terms and conditions. If interested, you can connect with a rep and make further enquiries.
5. Check if your new lender levies any prepayment penalties
Although the Reserve Bank of India has banned lenders from charging prepayment charges, your new lender could charge them under the pretext of transfer charges. These charges may be applied for the remainder of your tenure with the new lender. So, selecting a lender offering the lower interest isn’t enough. Make sure they don’t levy these additional charges too.
6. Keep your documents in order
A smooth loan transfer to a new lender is only possible when you’ve got all the documents in place. These include age proof, address proof, identity proof, KYC documents, income proof, foreclosure letter, home loan approval letter, interest certificates, and more, depending from lender to lender. So, keep your documents in place to lessen your stress when it’s application time.
Additional Read: Difference Between Balance Transfer Home Loan and Top Up Loan
Over to you
Getting a balance transfer is most effective when you’ve considered and planned for it. If you’re looking to transfer your loan, opt for a trusted lender like Tata Capital. You can avail of benefits like higher loan amounts, lower processing fees, longer tenures, and more. Use our home loan EMI calculator to plan your loan transfer today.