A home loan transfer can help you save a lot of money in the long run. This article explains the benefits of taking a home loan transfer.
Taking a home loan has become a fail-safe option for those wishing to buy their own homes. The rising cost of Indian realty has ensured that most home buyers have no option but to take a home loan. But it is relatively simple to do so, given the fact that leading banks and financial institutions have good home loan products to offer.
But there may come a time when you realise that your EMI outgo is negatively impacting your overall budget. You can opt to refinance your home loan at this juncture - this option is known as a home loan transfer.
What a home loan transfer means...
A home loan transfer is a process by which you shift your existing home loan from your current lender to another one. It is done primarily to avail of lower home loan interest rates from another lender, or better repayment options. Transferring the home loan to avail of a reduced interest rate lowers the monthly spend on EMI. With reduced home loan interest rates, even your overall repayment to the bank is reduced. Thus, the process helps save a lot of money in the long run.
Effecting a home loan transfer...
As outlined above, the home loan transfer offers the primary benefit of saving you a lot of money over the long run. Leading banks like IDFC Bank offer easy transfer options, as also competitive rates of interest that can benefit you. If you wish to transfer your home loan to another bank, do follow these steps:
* Discuss your options with your bank: If you have a home loan with a floating rate of interest, then the lender will reduce the rate when the RBI cuts the repo rate on lending. However, if you discover that another bank is offering an even lower home loan interest rate, then you can ask your current lender to offer you the same rate of interest. If they don't, you can initiate the transfer process.
* Find out about the paperwork. The transfer process will involve some amount of paperwork. Leading banks like IDFC Bank have little paperwork and even the option to initiate the home loan transfer online. The new lender then approves the transfer request and initiates it with your current lender. The loan documents are transferred to the new lender, who pays the earlier lender the balance amount of loan money.
* Your credit score is unaffected. Most loan borrowers believe that the home loan transfer will reflect on their credit score. Relax - your credit score is unaffected by it.
* Find out the processing fees. The new lender will affix some processing fees to effect the transfer. Find out what these are beforehand, and don't opt for the transfer if the charges are too high.