Home loan is a long tenure loan and interest constitutes the major part of the EMI especially during the initial years of the loan tenure. Almost all the lending institutions allow the customer to balance transfer their home loan and take the advantage of changed market conditions. An interest rate is an important factor determining whether a borrower should continue with the same lender or not. Transferring a home loan means to transfer the home loan from the existing lender to a new lender. A balance transfer can occur due to numerous reasons like lower interest rate, poor customer service from the existing lender etc. Balance transferring home loan can be a stressful process, hence you need to proceed with caution. Following tips will surely make a home loan balance transfer work in your favour:
Do a Thorough Research
If you have a home loan running and you are planning to balance transfer it to a new lender then it is suggested that you should conduct detailed research before you finalize the new lender. You will come across many attractive deals and offers, do a comparative analysis and select a lender offering the lowest interest rate. Besides interest rate prefer a lender with favorable loan terms and conditions.
Collect All your Important Documents
When you decide to balance transfer your loan, you would require a trail of documents to proceed further like present loan agreement, sanction letter, address proof, identity proof, and stamp duty etc. Make a list of documents required and keep them ready for the quick processing of your loan application.
Ensure You Know All the Costs Involved
Balance transfer includes a lot of costs like you have to pay a processing fee to the lender, stamp duty, legal and technical charges, valuation and verification fees etc. You may have to pay some penalty charges to the existing lender as well. It is better you confirm all the charges to be paid from both new and existing lender to avoid any confusion at a later stage.
Never Opt for a Longer Tenure with New Lender
Longer tenure implies more interest paid even if the interest rate is low. Hence, a decision to balance transfer your loan should not be followed by a decision to extend the loan tenure. In fact, a lower interest rate will be more beneficial if you keep your loan tenure the same. Your EMI will be lower than before and your loan will be closed in the same time period.
Pay Your Balance and Confirm the same with Existing Lender
While balance transferring your home loan you will be required to clear off the outstanding dues with existing lender. Ensure you pay them and collect the receipt for the same, as your new lender might ask for a no dues slip.
Ensure the Property Documents are Transferred
Once your loan application for balance transfer has been approved, your existing lender is required to transfer important property documents to a new lender. Ensure none of your documents has been misplaced during the transfer process as this will delay your balance transfer process.
Additional Reading:- Which is better: Home Loan Balance Transfer or Home Loan Top Up?
Keeping the above points in mind while balance transferring your loan will help you to maximize your benefits.