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Know the Tactics for Home Loan Balance Transfer in India

Punjab News Express | May 22, 2019 05:17 PM

Refinancing your home loan with a lender offering a lower interest rate is one of the most effective ways of easing your repayment obligation and freeing your cash flow. Not only will this lower your EMIs, but it will also reduce the overall cost of borrowing. Here’s an overview of how a home loan balance transfer works.

The Process of a Home Loan Balance Transfer

Take a look at the steps involved:

Step 1: Compare your existing home loan interest with the new rates, and see if you are eligible for a home loan transfer with your preferred lender.

Step 2: Calculate your savings and compare with the cost of transferring your loan and only go ahead if you save a sufficient amount.

Step 3: Furnish the required documents relating to your employment, income, and residence to the new lender.

Step 4: Request a consent letter that mentions the outstanding loan amount from your existing lender and submit the same to your new lender.

Step 5: After verifying the documents, your new lender will repay your existing home loan balance in full to your old lender.

Step 6: Your old home loan account will be closed on successful repayment by the new lender.

Step 7: Then, your old lender hands over the property documents to the new lender.

Step 8: After this, you start repaying your new lender via EMIs.

Step 9: You may also be eligible for a top-up loan via your new lender and can also increase or decrease the tenor to suit your finances.

Tips to Follow when You want to Refinance your Home Loan

● Since home loan refinancing is like availing a new loan to repay your existing home loan, your new lender verifies your repayment track record and checks your credit score before approving your application. That’s why maintaining a good credit score of 750 or above to enjoy a hassle-free approval.


● If your current lender links your loan interest rate to the base rate, you can choose to refinance your home loan with a lender that links the rates to MCLR. This way, you can benefit from repo rate cuts and also enjoy greater transparency.


● Refinance your home loan in the initial 4 to 5 years of servicing the loan as it is when you pay a hefty chunk of interest. Transferring anytime later may not be a financially feasible option. Use the home loan balance transfer calculator to see how much you stand to save to make an informed decision.


● A home loan balance transfer involves various charges like processing fees, penal interest, EMI bounce charges, prepayment and foreclosure charges among others. Thus, do a cost-benefit analysis before switching to a new lender and proceed only if the option seems feasible financially.


● A home loan balance transfer is governed by a legal agreement, so don’t be swayed by just a lower home loan interest rate and sign the document without reading it. Understand the terms, conditions, and your and your lender’s rights and obligations and only then go ahead.


● Use a home loan EMI calculator to calculate your new EMIs after refinancing your loan. This way, you can also reframe your new budget to accommodate the changes.

 

Consider transferring your home loan balance with a reputed lender to not only gain from a lower home loan interest, but also from a list of other useful features that add value to your loan experience. In this regard, Bajaj Finserv offers an easy Home Loan Balance Transfer process, competitive interest rates, a top up loan of up to Rs.50 lakh, and prepayment and foreclosure of floating interest home loans at no additional costs. Check your pre-approved offer to view your tailor-made deal and expedite your financing.

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