The act of transferring your ongoing home loan from one lender to another – for a lower interest rate, better terms, or even better service is called a home loan balance transfer.
One may assume that switching the lender for your home loan as soon as you are offered a lower interest rate may be in your best interest. However, there are other considerations to be made too.
Here is a look at some scenarios when you should consider doing a balance transfer of your home loan:
1. Interest rates lowered
The Reserve Bank of India regulates the CRR and bank rate from time to time. A reduction in these two might result in a lower interest rate. However, it should be noted that the interest rates are flexible and can fluctuate from time to time.
How to decide: If a potential new lender is offering a reduced home loan interest rate that will effectively decrease your monthly EMI burden, you can consider transferring the home loan.
2. Cost and terms involved
Just transferring your home loan every time there is a rate cut is not an option. There are strings attached with a home loan balance transfer, like the transfer cost and the terms of transfer. Analyse the costs and the terms very carefully. If you are not happy with your existing lender, switch your home loan.
How to decide: Settle for the lowest transfer costs and friendly terms. At Bajaj Finserv, an online home loan balance transfer from other lenders can be disbursed in less than 4 days. Consider all the benefits on offer.
3. Higher outstanding loan amount
It is advisable to transfer a home loan when the outstanding loan amount is higher. Like any other EMI, a home loan EMI constitutes the principal amount and the interest amount. As the loan matures, the principal amount gradually gets paid, thus reducing the outstanding loan amount.
How to decide: Decide based on the outstanding loan amount. Transfer your home loan if a good chunk of the home loan is outstanding and get a better deal from another lender.
4. Property authorisation
One crucial factor will be to check in advance if the new lender has approved your property for a home loan. Each lender has different approval lists and procedures.
How to decide: In most of the cases, a lender will approve your home loan if the property is undisputed and built by a credible builder. Still, check with them for your property authorisation.
Conclusion
The factors mentioned above will help you decide the right time for transferring your home loan. With online procedures for home loan transfer in place, the hassle has been drastically cut down.
Follow these simple steps to complete the transfer of your home loan today.
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