Mr. Aakash Agnihotri, a Pune resident, took out a Home Loan 2 years before after doing all research and finalizing a reputed lender. He had an excellent creditworthiness, and a clean repayment history and these qualities worked in his favor to get a good deal on his Home Loan.
Things were going super-smooth, and he already made 12 EMI payments towards the Home Loan when one fine day his close friend Rakesh visited him who also had taken a House Loan 6 months before.
They both discussed their Home Loans, and that’s when Aakash realized that he had been paying a higher interest rate on his current Housing Loan. He was puzzled as to what to do next, and that’s when Rakesh suggested him to decide on a Home Loan balance transfer to a new lender and lessen his Home Loan interest rate.
If you are one like Aakash who had been paying a higher interest rate on a housing loan, you can also use the Home Loan balance transfer and make your loan affordable.
What is a Home Loan balance transfer?
A Home Loan balance transfer lets you switch an existing Home Loan account from a high rate of interest demanding lender to a one who has been offering a reduced interest rate.
The immediate benefit of this facility is that it not only helps you pay a lower EMI and save money per month, but even the top-up loan in which you can further avail a loan for an amount up to Rs.50 lakh.
How to make a Home Loan balance transfer work in your favor?
The success or failure of a Home Loan balance transfer depends on certain elements. Have a look and then make a decision.
- Do your research
Don’t jump to a first lender and switch your home account instantly. Do a thorough research and compare all the Home Loan interest rate that they have to offer. You can also visit a website of a third-party and get to all the offers provided by all lenders. Also, make sure to understand all the terms and conditions of the new lender and don’t fall or a trap.
- Collect all relevant documents
Once you have decided a lender, the next task is to go ahead with the application procedure which may require various documents. Get all documents such as loan approval letter, loan agreement, all types of ID proofs, photographs, property registration documents and stamp duty ready. You will need all these to submit to your new lender.
- Get all required approvals
Once you submit all required Home Loan documents, your new lender will verify it and may ask for more details. Be willing to provide all details, if any. Once the formality of the new application is done, take approvals from new and old lenders.
- Sign loan agreements and transfer the property documents
A new agreement will be given by your new lender, sign it and also make sure that your Home Loan documents are transferred from your old lender to the new one.
The Bottom Line
A Home Loan balance transfer will also include some processing and stamp duty along with legal and technical charges.
Your old lender will also levy a transfer charge. You should always do a Home Loan balance transfer only when you see that interest rate of the new lender is low else it would serve no purpose. All the best!