Home Loans can be helpful but if not examined and planned properly, it can be a burden for the applicant and can even cause payment defaults leading to a bad credit report. Mostly, people face problems that are related to high-interest rates. Interest rates can be one of the gruesome nightmares for a loan applicant while repaying a loan. Hence, it is important that you choose the lowest possible interest rate for your Home Loans.
High-interest rates can be a major problem for the loan applicants, while the most recommended option for this scenario is to prepay your loan. Pre-paying your loan would end the debt beforehand which would help you save a lot on the interest amount. Also, pre-payment might not be the ideal option for everyone as Home Loans have a high principal amount, it would not be feasible for everyone to manage. To save yourself from paying excessive interest amount, you can opt for a Home Loan Balance Transfer.
What is a Balance Transfer?
A balance transfer is a provision offered by the lenders in which you can shift your Home Loan from one lender to another. A balance transfer can be the ideal option for loan applicants who are paying high interest on loan amounts to the existing lender. By switching the lender, you can minimise your interest rate which will automatically lessen your interest amount.
How to Apply for a Balance Transfer?
You can transfer your Home Loan balance to any financial institution. The process to apply for a balance transfer is simple. Follow these simple steps:
1:- Find a Suitable Lender: To apply for a balance transfer you need to find a suitable lender, who provides you loan according to your requirement. Lower interest rates are one of the basic requirements that people seek while transferring their loans to a new lender. When searching for the new lender, you also have to consider the Home Loan transfer charges that are applied for a loan transfer.
2:- Submit the Documents: For the balance transfer, you have to submit the documents like the loan application, information of the property and your income details. Once your balance transfer is approved by the new lender, they will send the old lender a cheque, and after receiving the No Objection Certificate (NOC), your loan balance will be transferred.
3:- NOC from your previous lender: Once you have found a lender that provides you with a balance transfer according to your needs, you have to inform the previous lender about the balance transfer. When you inform the previous lender about the balance transfer, they will start the loan closing process and will give you an NOC for the balance transfer after they receive the cheque from the new lender.
While transferring your loan, you need to read the transfer related documents carefully, because some lenders also have a lock-in period for transferred Home Loans. Since Home Loans are transferable, some applicants tend to shift their Home Loans frequently, according to the changes in the interest rates of Home Loan in the market. This can cause harm to the portfolio of the lender, which can be a loss for them.
To avoid such losses, the financial institutions have made a compulsory lock-in period clause in the loan transfer agreement. As lock-in period for the transferred loans ranges from 2 years to 4 years. So before finalizing the loan transfer, it is important that you check the loan transfer lock-in period offered by the lender.
It is important to take into consideration all the facts before applying for a Home Loan balance transfer, therefore, research properly before proceeding further.