Transferring a Home Loan

People Switch their Home Loans from one financial institution to another because of an outstanding difference in the rates that the housing finance company is offering to its new customers as compared to the old one.

Transferring the Home Loan

If a person wants to make significant savings, it is advised to shift from one housing finance company to another. If you are getting difficulty in paying the EMI’s of your loan, you may want your lender to increase the tenure period to reduce bulky installments.

Check the rates:

You must enquire about the Home Loan Interest rates with the bank you are planning to shift your home loan. If the bank has also raised its rates, it is pointless to switch to this bank.

You must try to transfer to the bank when there are a great distinction in the interest rates at least 50 basis points, between the interest rates of your current bank and the bank in which you want to apply.

You can gain maximum gains when moving earlier in the tenure period of the loan. In the case of teaser Home Loans, the existing banks will not charge any penalty and the new banks can waive off processing fees of 0.5 % or 1.5 %.

Negotiate with a lender:

  • If there is a meaningful difference in the interest charged by the bank on you and one being charged from new customers, then you can try to negotiate with the current lender.
  • Sometimes the bank may agree to charge a lower rate. Some of the banks may offer a conversion option, where you will have to pay the fee ranging from 0.5% to 1.5 % and the bank will shift to the lower rate as charged from the new customer.
  • Try to do the cost comparison between the available two options.

New bank’s conditions:

  • When the bank accepts your loan applicant, the most important part that a bank ass is your repayment record with the former bank. If you have been defaulting or paying late your Emi’s, your applicant for the loan transfer can be turned down.
  • If you have already taken a Loan Against Property that is being constructed, your loan application will get passed when the property was approved by the former lender.
  • You must check the margin requirement. In case,  it is higher, and your Loan application is at an early stage, you must be well prepared to withdraw a large amount of money from your pocket.

Costs and Procedure included:

  • Try to get a NOC ( No Objection Certificate) from the existing lender.
  • Try to get a document in which your outstanding principal amount must be listed.
  • Submit these documents to the new lender which will exercise them as done by the new customers like verification of the property, credit evaluation, and many more.
  • After the paperwork, the new bank will transfer the whole outstanding amount to the old lender. In return, the new bank will hand over the property papers to the new bank.

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