Home Loan Transfer

Home Loan Transfer

A Home Loan transfer (also known as refinancing or balance transfer) is an option which individuals choose to take advantage of lower interest rates in the market. Usually, an existing borrower, who is about 2 or more years into his loan tenure, has no benefit of reducing interest rates in the market, for example, if he has opted for fixed interest rate.

Such individuals could have a discussion with their bank and re-negotiate their interest rate. By citing a good repayment track record, it becomes easier. If the bank is not amenable, they could shift to another bank or financial institution which offers a lower interest rate for Home Loans.

The Transfer Process:

Firstly, you need to submit a letter to the existing lender, requesting a transfer. Based on your request, the lender will give a consent letter or No Objection Certificate (NOC) along with a statement mentioning the outstanding loan amount. You need to provide these documents to the new lender, who will then transfer funds to the old lender for an account closure. Once this transaction is done, your property documents will be handed over to the new lender. The remaining post-dated cheques that you might have given to the old lender will be cancelled.

Things you should consider while switching Home Loans:

  1. It is always better to switch early on during the loan tenure. This is because interest will still be a major component of your EMI and switching would be mean savings.
  2. Get an acknowledgement from your current lender for the property documents that need to be sent across. More often than not, the documents are not sent on time to the new lender, without a bit of a push from the borrower. Remember that a loan switch will not be possible if you have been irregular with your loan repayments.