Are you in a mindset that you are paying a home loan with high interest rates and charges? Is high EMI on home loan turning to be a burden? It is essential to check the status of home loans that you currently have in your plate. Ever you feel the interest is too high or the EMI are too much to take, make use of the option of transferring home loan to the different lender. But before you make a decision to change home loan to a different bank, here are few things to be taken into consideration.

  • Are You Eligible For Transferring Home Loan?

Certain banks will give home loan option only to salaried individuals. Therefore in case if you are self-employed it is important to check with the new bank if they are ready to take your home loan or not. And also check the fee details that you will have to pay to new banks for transferring your outstanding home loan. Most probably the fee details will be about 1% of the outstanding loan amount. So if the outstanding amount is higher, fee will also be proportionally higher. Also check if balloon payments are accepted by the new bank and what would be the pre-closure charges.

  • Check with Your Bank to Know if they will Lower the Home Loan Interest Rate:

Even before making any decision, firstly check what your bank with existing home loan has to offer you. Some banks might be ready to lower the interest rates or EMI with the interest of not losing customers. This option will help you in saving a lot of time, money and effort. There will be no need to run around through new formalities and procedures. Banks will be flexible to reduce interest rates or EMIs by considering the past payment records and credit worthiness of the borrowers. Thus it is essential to have a very clean payment track record of EMIs and interest.

Top 5 Hurdles of Home Loan Balance Transfer

  • How much Will the Transfer of Loan Cost:

In most of the cases banks will charges transferring fee. This fee will be applicable from the bank in which there is existing home loan and also from the new bank to where the loan has to be transferred. Calculate if these fees are worth the transfer. In case if your loan is only for a short period, then there will be not many benefits. Thus do a complete analysis before initiating the request.

  • Terms and Conditions of Transfer of Home Loan:

It is crucial to be aware that once you shift your home loan to a new lender, you will be bound to their terms, conditions and policies. Go through all the terms and conditions thoroughly to make sure, it is definitely going to be a long term benefit by transferring the loan amount. Some banks might need your salary account to be transferred to their bank in case to take up the home loan from different bank. These will involve a lot of formalities and paper work. Try avoiding such types of home loan transfer as will involve your employer to give consent to the same.

Guide to Home Loan Balance Transfer

  • Is the New Bank Ready to Accept the Debt Amount?

This is the most important part of transferring a home loan. The new bank should be ready to take up your existing debt by offering better rates and charges or EMI option. Check, what is your outstanding balance from the existing home loan bank and enquire if there is limit for taking up loan in new banks. Suppose your outstanding loan amount is 15 lakhs and if the new bank has limit only till 10 lakhs then there is no point of initiating home loan balance transfer request.

  • Make Sure There Are No Cheque Bounces:

It is quite common that loan borrowers will give lenders posted dated cheques for monthly installment withdrawal. But the main issue with this style of EMI is there are high chances of cheque bounces in case if there is no sufficient balance in the borrowers account when the lender presents cheque. This will affect the CIBIL rating of the applicant and could lead to not getting approval for new loans or loan transfers.

Due to these reasons it is very essential to take time to decide whether to transfer home loan or not. Always think through and consider the pros and cons of going through home loan balance transfer. Unless this brings long term benefits, don’t opt for home loan balance transfer.