With property prices appreciating in premier localities and the cost of real estate skyrocketing, purchasing a house can be a very expensive affair. Typically, the way to finance such a big-ticket expense is through a home loan transfer. Even though they allow you to split the cost of the apartment or home over a tenor of 20 years or so, the EMIs and net interest payment is sizeable.
Therefore, it can be distressing to discover a more favorable loan after partnering with a lender. Luckily, there is a provision to deal with such a situation, and it is called a home loan balance transfer.
Here’s everything that you need to know about a loan transfer from one bank to another.
What Is a Home Loan Balance Transfer and Why You Should Opt for One?
A home loan balance transfer is a process via which you transfer your existing home loan to a new lender. In essence, a loan transfer from one bank to another involves refinancing your home loan with a lender who levies interest at a more favourable rate. The benefit here is that with a lower rate of interest, each individual EMI reduces and so does your net payment. Further, smaller EMIs also give you the opportunity to part-prepay the loan or shorten the tenor, moves that can considerably make the loan more cost-effective.
When You Should Opt for a Home Loan Transfer?
It’s best that you carry out a home loan transfer in the initial stages of the repayment tenor, as this is when the interest portion of each EMI is highest. When you fail to do so, you
would have paid a major portion of the interest and be left with EMIs that comprise mostly the principal. Moreover, when you transfer early on, the net interest reduction outweighs the total cost of carrying out a loan transfer from one bank to another and hence makes the proposition beneficial. Therefore, before initiating a transfer, it’s best that you do the math to gauge the cost-effectiveness and viability of doing so.
Likewise, it’s good to weigh all pros and cons, and not just the net interest payments when considering a home loan transfer. For instance, when you carry out a loan transfer from one bank to Bajaj Finserv, you not only benefit from a cost-effective interest rate, starting at 8.30% but also get access to a Top-Up Loan of up to Rs.50 lakh.
Further, the Top-Up Loan interest rate is competitive as well and you can avail this additional facility after opting for a home loan transfer without producing any extra documents. Additionally, you can make use of the home loan balance transfer and top-up loan calculator to estimate your savings and know how much additional finance you are eligible for.
What Are the Benefits of Loan Transfer From One Bank to Another?
Below are some of the benefits you enjoy when you opt for a home loan balance transfer.
- You pay less interest in the long run
- You can repay the loan faster
- You can negotiate a longer repayment tenor
- You boost your credit score while servicing debt in a cost-effective, affordable manner
- You can enjoy better features like a large top-up loan
What Is the Process of Carrying Out a Home Loan Transfer?
The process involved in a home loan transfer is easy and hassle-free. All you need to do is:
- Write a letter to your current lender requesting a loan transfer. Next, your lender will provide you with a NOC and a statement indicating the amount outstanding
- Make an application to the new lender, submitting the NOC along with the other documents required
- Wait for your new lender to sanction the amount to close your previous account
- Begin repaying your loan at a reduced rate of interest to the new lender
Now that you know the essentials of a loan transfer from one bank to another, identify a suitable lender, and reduce your repayment burden instantly. When you partner with several lenders you can begin refinancing your loan in just 5 to 10 days. What’s more, you can check your pre-approved offer to expedite the home loan transfer process further!
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