Home Loans are one of the most popular financing options to fulfil your dream to purchase a house. With the availability of a plethora of banks and housing finance companies, it has become easier to apply for home loans. You can apply for the loan either online or offline according to your convenience. However, if you have already availed of a home loan, and you are not satisfied with your current lender, then you also have the option to switch your home loan to a lender who is offering the loan at a reduced interest rate. For your easy understanding, here is a step-by-step guide about what all you should consider while transferring your home loan.
Explore the possibilities of home loan balance transfer
First of all, before you start looking for new lenders to transfer your current home loan, you should carefully read the terms and conditions provided by your current lender, as certain banks and financial institutions have a clause that restricts the transfer of a home loan to another lender. So, if your lender has such a clause that prevents you from doing the same, then you are only left with the option to renegotiate your home loan interest rate with the current lender.
Negotiate for a lower home loan interest rate
Another thing to consider before opting for a home loan balance transfer is negotiating for a lower home loan interest rate with your current lender. This can be easily done if you have maintained a good credit history and on-time repayments of the credits you have already availed. It is worth a try to consider negotiation as an option as some financial institutions might agree to lower the interest rates in the concern of not losing their valuable customers. Also, if it turns in your favor, it will save a lot of your time, money, and effort. Plus, there will be no need to run around for new formalities and documentation procedures.
Checking the market for affordable interest rates
If the above-mentioned options do not work, it becomes necessary for you to avail of the balance transfer facility. To start with this process, go by checking for lower interest rates offered by various banks and financial institutions available in the market. You can do this process by comparing various home loan offers online.
Collecting the information about the chosen lender
After shortlisting the few lenders, another parameter of comparison amongst them should be the benefits and services offered with the balance transfer facility. Moreover, it is highly recommended to go through the track record and the reviews of the chosen lender before arriving at a final decision.
Calculate the total cost of transferring your loan
Before going for a balance transfer, you must remember that you should not transfer your home loan every time you come across a lower interest rate because there are charges involved with it. Transferring your loan involves several charges such as processing fees, application fees, administration charges, inspection fees, among others. Also, there will be some other charges which will be charged by both your existing bank and the new lender. Calculate whether the cost of a balance transfer benefits you or not. For this, you can use the online financial tool known as a home loan balance transfer calculator to estimate the total process cost.
Go through the terms and conditions
It is crucial to be aware that once you transfer your home loan to a new lender, you will be bound to their terms and conditions. While a lower interest rate may seem tempting, it is also essential to have a clear understanding of all the conditions associated with your home loan. This will include certain hidden charges as well. Therefore, you need to go through the fine prints carefully and then make a final decision.