Step by Step Guide for Home Loan Balance Transfer
With the availability of multiple lenders and a hassle-free application process, it is easy to apply for a home loan and realise your dream of being a homeowner. All you need to do is compare interest rates from various lenders and choose the best loan option as per your finances. However, despite thorough research, you may find a home loan lender that offers better interest rates while you’re repaying your loan, which can help you effectively reduce the cost of your loan. Though this may seem like a passed opportunity, you can simply move your existing loan to this new lender and avail of lower interest rates and favourable terms and conditions thanks to the home loan balance transfer option.
Availing of the home loan transfer option not only helps you reduce your interest outgo, but also makes you eligible for top-up loans at a lucrative top-up loan interest rate. Read on to know how to avail of a home loan balance transfer option and a step-by-step guide of the home loan transfer procedure.
Choose a new lender
Before you transfer your home loan, you need to conduct a cost analysis by comparing interest rates offered by lenders in the market. Remember to only opt for a home loan balance transfer if the new interest rate is significantly lower than your current interest rate. Moreover, you also need to ensure that the cost of transferring your home loan is not higher than the amount you save as switching your loans does come with certain fees and charges. Therefore, before choosing a new lender, ensure that you check for home loan transfer charges along with hidden charges that could inflate the cost of the loan. Choose to transfer your home loan only if the cost of the loan reduces significantly.
Apply with the new lender
Once you have chosen a new lender, you need to apply for a home loan balance transfer. This includes submitting documents about your eligibility and current home loan details for approval. Here, you will also need to mention the reason for the home loan transfer. Ensure that you fill out all details accurately.
Notify your current lender
Once you have decided to avail of the home loan transfer option and move your existing loan to a new lender, inform your current lender. This will not only help you know about any charges that you may have to bear, but also help you negotiate your current loan terms if the existing lender wishes to retain you. Therefore, before you decide to exercise this option, do your cost analysis to know how much you can save and state the same to your existing lender. If they are unable to match these conditions, then transfer your home loan to the new lender.
Request for NOC or consent letter from the existing lender
Submit a request for a consent letter or No-Objection Certificate from your current lender. This is an important document that signifies approval of your home loan transfer request. Moreover, your new lender will require you to submit this document.
Submit necessary documents to the new lender
Once you have your NOC, you need to submit this document to your new lender along with other necessary documents for approval of your home loan balance transfer. The documents required for your home loan transfer include age, identity and income proof, along with property papers, loan balance and interest statements and the application form.
Read Also: Best Solution when Opting for A Transfer of Home Loan Balance
Obtain a foreclosure letter from your existing lender
After submitting your application and documents, you have to procure a confirmation or foreclosure letter from your existing lender. This letter states that your dues against the existing home loan are cleared, and the home loan account, along with its terms, are closed.
Complete formalities with the new lender
Submit the confirmation or foreclosure letter to the new lender, complete the remaining formalities, and pay the required fees. Once your request is approved, you can start paying your next EMI to the new lender.
These steps will ensure that you successfully transfer your home loan to a new lender and enjoy lower home loan interest rates and newer benefits. To ensure accurate cost analysis while considering a home loan transfer or applying for a top-up loan, use the home loan balance transfer calculator or the top-up loan calculator.