Taking a home loan makes buying your dream home easy, but you may come across a better home loan with a lower rate of interest and value-added services. In such a scenario, you might want to transfer your home loan to the new lender offering better services. This process of switching or transferring your home loan from one lender to another is known as a home loan balance transfer.
Typically, you shift your home loan’s balance to a new lender when the terms of your current lender seem unfavourable and the institution is unwilling to negotiate. While there can be various reasons for you to seek a transfer, the most common reason for a balance transfer is when you are paying a high rate of interest. It can also be a mix of reasons like rigid terms, too many additional charges and poor customer service.
It is best to carry out a Home Loan Balance Transfer in the early years of your tenor. This is because in the beginning, the interest component of each EMI is much higher than the principal component. So, it is during this period that you will benefit the most from the drop in the interest rate. Also, remember that you may have to pay a charge to carry out the balance transfer and repay the processing fees to the new lender. So, take these numbers into account, understand your net gain and only then make a decision. It will help you guarantee that your balance transfer is truly helping your savings.
A few home loan balance transfer benefits listed below that you can enjoy.
Now that you know how beneficial a home loan balance transfer is, look at the process of getting the same done with a reputed NBFC like Bajaj Finserv.
Submit an Application to Your Current Lender:
When you feel ready to seek a balance transfer, it is important to inform your lender via an application. This application will consist of a letter or a form. In either case, construct the application carefully and list your reasons for the transfer. If it is a form, ensure you fill it accurately.
Collect The NOC or Consent Letter:
Once you have completed the first formality, your lender will get back to you with a No Objection Certificate (NOC) or a consent letter. This document is crucial, as your new lender will require this when you file your application.
Hand Over Your Documents:
Once you have received the NOC you can then contact the new lender and hand over all your documents. Apart from submitting essential documents like the NOC and KYC documents, you may also have to submit a copy of your property papers, loan balance statements and interest statements and a filled application form.
Get Confirmation from The Old Lender:
After submitting all your documents to the new lender, wait for a final confirmation from your old lender concerning the closure of your loan account. This certifies that the loan contract has ended, as have the terms governing it.
Pay All The Fees Involved and Start Afresh:
Now, all that is left for you to do is to sign a contract with the new lender and pay the fees that are due. Once this is complete, you can pay your next month’s EMI to the new lender. Following this step-by-step guide can help you easily carry out a home loan balance transfer with the lender of your choice. Once this is done, you can enjoy benefits like affordability and flexibility that your new lender has to offer.