Rajesh was sitting on his computer late at night finishing off calculating his monthly budget. Suddenly he gets an email about a hike on the interest rate of his home loan. This sends his mind into a panic mode and he starts ferociously scrambling to find policies that offer more attractive terms.
There is nothing more lucrative than the option of paying less interest on your home loan. In fact, if you transfer to home loans by Bajaj Finserv, available on Finserv MARKETS, you will also have the benefit of a top-up facility. So if you have transferred an existing loan, but need a top up, you can get the top-up amount without any extra documentation. However, loan bank transfers should not be done lightly and if you are a borrower here are certain factors you should keep in mind and check before you opt for a loan bank transfer.
1. Are you even eligible for a home loan bank transfer?
Before you jump on to your computer or on your phone to look up for policies which will offer you lower rates and lucrative benefits the first step is to carefully read the terms and conditions of your current loan. It may be possible that certain banks and policyholders do not allow you to transfer your loan from one lender to another. If this is the case you do not have any other option, but to try and renegotiate the loan with your current lender.
2. Check the overall cost of transferring and whether it will be worth it
You should not be simply jumping to conclusions after seeing a lower interest rate. Transferring your home loan comes with several costs, including processing fees, application fees and prepayment fees (in several cases). Most banks may also charge a transfer fee, which is charged both by the existing lender and the new lender where the loan will be transferred to. You should calculate and ensure that the costs involved in the transfer are less than the interest amount that you will be saving.
3. Consider how much of your policy term is left:
Switching a home loan in the second half of your loan tenure is often considered to be useless as most of your interest led Easy Monthly Instalments (EMIs) have already been made. If you plan to transfer your home loan, do it as early in the tenure of the loan as possible as you will be paying a lower interest rate when you transfer.
If you choose to switch your home loan to a loan from Bajaj Finserv, available on Finserv MARKETS, you will have the option of choosing your new loan repayment tenure to a maximum of 300 months. Additionally, you also have the option of part-paying or foreclosing the loan without any additional charges.
4. Ensure you have all the necessary paperwork for the transfer
If you are opting to go for a balance transfer of home loan, you have to submit a consent letter or a No Objection Certificate (NOC) from your existing lender to your new lender requesting for a home loan transfer. Once you provide this to the new lender, the bank or institution will approve your loan amount to the old lender and your old account will be closed. After this is done all your property documents will be handed over to the new lender and you must ensure that no documents are being left behind.
5. Read reviews about your new lender before deciding to switch
There are a range of banking and financial institutions in the market willing to lend you money at lucrative rates. However, it is critical that you read about their market perception and customer service before opting for the switch. A home loan is a long-term commitment and you will be dealing with your new lender for a long time, hence, ensure that existing customers are satisfied with the services being provided by your new lender. Go through reviews and testimonials to ensure your new lender will be trustworthy.
6. Read the terms and conditions of your new loan carefully
It is very important to understand that not all policy documents are the same. Your new home loan will be a completely new contract and it is critical that you read the fine print to ensure that you are not simply looking at the low-interest rate and overlooking clauses.
While nobody wants to pay extra interest rates when lower rate policies are available in the market, you should consider all the above-mentioned factors very carefully before opting for a home loan balance transfer. Ensure that the switch will be beneficial for you in the long term.
Also, read about home loans.
Finserv MARKETS, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. We understand that every individual is different and thus when you plan to achieve your life goals or shop for the gadget of your dreams, we believe in helping you Make it Happen in a few simple clicks. Simple and fast loan application processes, seamless, hassle-free claim-settlements, no cost EMIs, 4 hours product delivery and numerous other benefits. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere!