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The recent changes introduced by the Reserve Bank of India, such as the reduction of repo rates by 40 basis points, have lowered the overall home loan interest rates. However, the existing borrowers who opted for fixed interest rates are unable to take advantage of such rate cuts. In such a scenario, a home loan balance transfer comes as an ideal alternative to transfer the existing loan to another financial institution offering lower interest rates.
Ideally, this process ensures that borrowers enjoy better repayment terms and moderate interest rates to make their EMIs more affordable.
How long does it take for a home loan transfer to process?
Since a home loan balance transfer involves going through the eligibility factors and considering certain requirements from the borrower’s end, the process might take some time to complete. It mostly depends on the financial institution you are opting for and specific document requirements.
Individuals with a decent CIBIL score and a good repayment track record inevitably get preference from the lenders. Following are the steps for how this transfer process works:
- Borrowers generally check the interest rates offered by different lenders and calculate the difference along with interest rate savings.
- The next step is to calculate the estimated processing charges, and other fees one has to bear while making the home loan balance transfer.
- If there is an immediate cash requirement, one can avail of additional funds as a top-up loan by depositing all the required documents. In this regard, a foreclosure letter from the existing bank is also mandatory in order to utilise these benefits.
- Once the loan gets sanctioned, you will receive a sanction letter from this new lending institution along with disbursement.
Apart from these factors, borrowers should also choose wisely among fixed and floating interest rates and top up loan interest rates, while transferring the loan to a new lender.
Factors to keep in mind before going for a home loan transfer
In order to evaluate whether the process will be helpful for your current home loan, look out for the following factors:
- Compare multiple lenders to determine the most beneficial option, and check the difference between your on-going interest rate and the new one.
- You should also check the remaining loan tenor as applying for a home loan balance transfer towards the end of your existing loan period results in unnecessary hassle, without any or substantial savings.
- There are certain processing fees associated with a loan balance transfer, which usually vary from one lender to another. Therefore, it is equally important to check the additional charges before refinancing your home loan.
- Borrowers also get access to top-up loan facilities while opting for a home loan transfer. The process allows them to avail some additional funds to overcome any sort of monetary crisis. However, it is advisable to use a top-up loan calculator to check the amount and apply for the loan.
Additionally, top housing finance companies are also coming up with several pre-approved offers to make financing easier. Borrowers can go through these offers as well while opting for a home balance transfer. These offers are available on different financial products such as home loan, loans against property, etc. You can easily check your pre-approved offer by submitting basic details like name and contact number.
A home loan balance transfer is one of the smartest ways to reduce home loan tenor and EMI since you get more repayment flexibilities by choosing a new lender. However, it is advisable to make the transfer at the right time, especially when the market rate is comparatively low.
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