Before discussing in details about guidance to home loan balance transfer, it is important to learn why a home loan is important. Well, the home stands as one among the three basic necessities of life. Although, before buying a home one saves up enough so that he can afford the desired home, they tend to take a home loan. So why home loan? The home loan provides you with a security that without any hindrance you can buy your home. All you need to do is repay them back on time.
So, now it is important for you to know that what a home loan balance transfer is. A home loan balance transfer is the most popular way that helps in reducing your interest rates. A balance transfer is done in the time when the total unpaid amount of the principal loan is transferred from one account to another bank account for lowering the rate of interest.
A home loan balance transfer is also commonly known as balance transfer or refinancing. This is what most individuals choose to do to take advantage of lower interest rates which are available in the market. Generally, if an existing borrower has opted for a fixed interest rate and has about two or more than two years into his or her loan tenure, they shall not get the benefit of reduced interest rates available in the market.
Nevertheless, you always have the option to talk to your bank and convince them to re-negotiate your rate of interest with them. It is very beneficial to have a good repayment track record of your own in past with the same bank. Even then, if your bank is not acquiescent, you are free to shift to a new bank or financial institution that claims to offer your lower home loan interest rates.
Well, so here are the important things that need a quick recalling.
The Process of Transfer
In the very beginning, it is mandatory for you to produce a letter to your current lender with a request for transferring. It is only after your lender receives your letter, he will provide you with a NOC or No Objection Certificate which will be based on the letter written by you. Also, along with a NOC certificate, the lender will provide you with a statement in which your outstanding amount of the loan would be mentioned.
Well, you also need to submit these documents (the NOC and the statement) to your new lender. Based on your submission of the documents the new lender will only then transfer funds to close your account with your former lender. As soon as these two processes would be over, your documents regarding the property would be given to your new lender. All the other post-dated cheques with your old lender will be canceled. Well, don’t think your transfer is over yet. There are certainly other things that need to be done as well.
Repeating the initial procedures of Home Loans
Well, since you have a new lender now, you will need to provide him with all the papers and proofs that you had to submit while you initially applied for a home loan to the previous sender. This is important to have all your documents resubmitted to the new lender as in any emergency or hindrance; the lender will be able to help you. The document that needs to be submitted includes an officially authorized verification of your property documents, your credit appraisal, and a technical estimation with the new bank. Only after you have submitted all of these and a satisfying verification is commenced only then shall you receive the loan.
It is important for you to remember that the lender lends you home loans on the basis of what the current market rate is. Also, if he is considering lesser than the market it is for his customers. You always can negotiate with the rate amount with your lender.
Take Charges into Account
There are some banks that charge a forestallment fine for your balance transfer. This can vary from somewhere between 2% – 5% of the primary outstanding sum of the loan. However, this completely is dependent on the lender you choose. However, in recent times, many private institutions and banks surrender this for the benefit of their customers.
So, you should first check with your bank and try to consult a waiver in case the charges for the case are applicable. Also, make a note in case you might have to pay a dispensation fee to your present lender. This usually ranges somewhere between 0.5% – 1% of the loan quantity. Although in the present time most of the banks restrict the amount to Rs. 5,000. You can always ask to waive the money and the interest.
You should definitely take these charges into your account while you are evaluating lenders before finalizing your balance transfer. Suppose you feel there is a significant amount of interest that you can save from the move, only then you should switch to such a deal.
Well, frankly there are certainly other reasons apart from saving on interest, you should consider before you decide to switch. They are listed as follows:
- Your bank isn’t ready to re-negotiation:
There are times when you would definitely want to re-negotiate certain terms and conditions that you have had with your bank. However, if your bank refuses to budge in, you can definitely take a chance and consider switching.
- No top-up:
The payments that are connected to the property which you purchased usually go up significantly. Considering this particular point, you can demand a top-up loan to refurbish your home or make any other necessary changes to your purchased plot. If you find your lender is not providing you with all of it or is not interested in providing such loan, you can consider switching.
- Service issues:
If you are unhappy about what your bank is providing you with or your services with your bank, you can definitely plan to switch.
Overviews of facts you must consider before switching are enlisted below:
- Remember this that it is always better to switch early while you are on the loan tenure. As this interest will still be a key element of your EMI and switching would always help you to save more.
- You should mandatorily get hold of an acknowledgment from your present lender for the property documents as you need to send them across to your new lender. It is generally seen that the documents don’t get sent on time to the new lender until there is a push from the borrower or, to say the least, a severe push.
- You need to have a clear and better history of repaying the loan you have taken previously. Any adulteration found in the history would be a hindrance in your path of switching.
- It is better to discuss switching as you need to know how much less interest is paid and how much money can you save and for that you need to know about details of the market. You can get assistance from https://chqbook.com/hom
To know more about transferring of home balance, please visit https://chqbook.com and enjoy important and interesting facts about home loans.