Important Things You Must Factor in Before You Transfer Your Home Loan

Lenders come up with distinct loan offers to attract customers to take up the balance transfer option from them. Given the number of choices one holds, you need to evaluate the credit options such that you end up choosing the correct home loan in Mumbai or home loan in Delhi or a home loan in any other location and do not require transferring your loan proceeds further in the future. 

To do this, there are specific important things that you must factor in before transferring your home loan. The major consideration typically you must look at is the interest rate. This is a crucial factor but not the sole consideration. There are other important parameters even to factor in before you make the decision, and they are listed below – 

Ensure to have a higher repayment left – 

If you find a lender providing a lower rate of interest, it makes complete sense to switch just if you hold a long tenure left. Just then would you be able to make considerable savings on interest constituent? If you have just 2-3 years left, then it makes very little sense for you to transfer to the new lender as you might require bearing the processing charges and other important miscellaneous fees. Remember that interest constituent in EMI is higher in the course of loan repayment tenure’s formative years and tends to reduce as you get close to the loan tenure. So, if you hold a tenure of anywhere between 8-10 years, it is crucial to switch to a lender providing a lower rate of interest. 

Make sure you have not previously defaulted on your EMIs – 

It is another important consideration point. If you have defaulted on your loan EMI with your existing bank lender, it will show up on your score and report. Remember that your new lender tends to review such things before accepting your transfer request. 

In the case your new lender finds any irregularities in your repayments, then this may make the lender turn down your request to transfer your loan. The new lender would even review your account statement with your prevailing lender and determine accordingly whether to decline or accept your loan request. So, ensure to always have a good and clean track record when it comes to making loan EMI payments. 

Ensure to accumulate all the property-linked documents – 

Your documents play a very important role in your loan application as well as the transfer procedure. Before making the loan transfer, ensure you hold all the required documents, property, and personal documents in a single place so that there are no roadblocks in the loan transfer procedure. Moreover, you require getting in contact with your prevailing lender and collecting a written assurance that the lender will provide you with all your original property-linked documents within a particular time period. Your new lender will ask you to provide such documents and so it is a must for you to get them timely. 

Simultaneously, you must consider the charges that you may require paying involving the application charges, processing charges and other administrative fees. Ensure such charges are reasonable and do not come across as a pinch in your pocket. 

Collect all info regarding the lender – 

Ensure to research well all about the lender with whom you are transferring your home loan. Go through all online reviews, and testimonials to get an idea regarding the services offered by them. You must ensure to go for the lender who endows the highest service quality, addresses all your concerns, and readily helps you in the case of any problem. 

Go through the fine print well – 

Before you move ahead with your loan transfer procedure, ensure you go through the fine print well. In a nutshell, read to understand all the terms to know if there are any kind of hidden fees and charges. You will receive more details on the penalties levied if you foreclose or default on a loan before the repayment tenure. So, make sure to read every sentence well and then sign when you are doubly satisfied and understand all the terms thoroughly. 

What are the things you must ensure to factor in before transferring your home loan deal?

While home loan refinancing is often advantageous, and the procedure is effortless, there are certain parameters that you must ensure to factor in before you move ahead with the mortgage transfer. Some of the crucial factors that you should consider are as follows – 

New lender’s creditworthiness – 

It is very easy for you to get carried away when any new home loan lender provides you with a lower rate of interest. However, before initiating the home loan transfer procedure, ensure the new company whom you are transferring the loan is credible. It is crucial to conduct a background check of the organisation before you consider making the transfer of your home loan. 

Remaining tenure on your prevailing loan – 

Going for the home loan transfer option in another half of your repayment tenure is not worth a move. If you hold just a few more years for making the payment of your existing home loan, then you must have cleared the interest constituent on your loan during the initial loan years. In such a case, refinancing your loan may not be a good idea. 

So, if you get a deal of a new loan offer to repay your prevailing loan during your last few repayment years, then you must avoid it as doing so would make you increase your interest expense on your new credit. Always ensure to refinance in the starting half of the repayment tenure. 

Refinancing cost of your loan – 

Home loan refinancing tends to attract specific fees. Before you go for a balance transfer option, ensure you compare all fees and charges and select the refinance option just if it is financially advantageous for you. If the refinancing cost like stamp paper charges, processing charges, documentation charges, etc. outweigh the savings that you get, then it may not be logical to refinance your loan.