Sometimes, a home loan balance transfer seems to be the only option for reducing the loan expenses. For some, it helps them save money, while for a vast majority, it proves a costly endeavor.
When you apply for a home loan, the lender charges you some fee, such as the processing fee. When you apply for a home loan balance transfer, your new lender might also charge a processing fee.
Coupled with the foreclosure penalty, if any, the total cost of a home loan balance transfer may increase the effective housing loan interest rate.
Read this article to discover the right approach you need to keep while applying for a home loan balance transfer.
5 Things You Need to Consider Before Applying for a Home Loan Balance Transfer
- Check the Loan Terms
The first thing you should do before applying for a balance transfer is to check the home loan terms.
Some lenders or loans bar borrowers from availing of a balance transfer, meaning you cannot transfer the loan to another lender.
If your loan or lender belongs to that segment, the only option that remains is to negotiate with the lender and request them to reduce the effective housing loan interest rate.
- Negotiate with Your Lender
If you have been a disciplined borrower who repays all EMIs on time, you can negotiate with your lender and request them to reconsider the housing loan interest rate. The negotiation can be beneficial in two ways.
Firstly, the lender might walk the extra mile to offer you a discount, to allay the fears of losing a valued customer. Secondly, you do not have to waste time searching for a new lender and applying for a time-consuming home loan balance transfer.
- Keep Browsing Until You Find the Best Lender
Finding the best lender might not be as easy as it seems. Some lenders display predatory rates to grab eyeballs, only to charge more once you apply for a home loan balance transfer.
Moreover, the housing loan interest rate is not the only factor. You also need to evaluate the application fee, processing fee, administrative charges, taxes, etc.
Additionally, the lender’s reputation also matters. For instance, PNB Housing Finance has a strong reputation and a track record of thirty years in the market. They display all rates on their website, no terms hidden. Applying for a home loan balance transfer can be remunerative when you find the best lender who does not charge borrowers exorbitantly.
- Look For the Remainder Term
Applying for a home loan balance transfer can be truly rewarding when you have many EMIs remaining to be paid.
Usually, borrowers jump to apply for a home loan balance transfer when they find another lender offering lower housing loan interest rates.
However, if you are nearing the home loan repayment term, it does not make much sense to transfer the balance, as the loan costs will reduce the benefits arising out of the balance transfer.
- Keep the Documents in Order
A home loan balance transfer is a document-intensive process. You need to keep several documents, including a No Objection Certificate (NOC), ready to conveniently transfer the balance.
Check the documents required to apply for a home loan balance transfer and get all tasks done before applying.
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A home loan balance transfer can help you save money. However, you need to evaluate the factors mentioned in this article to drive maximum value from the loan. Ensure to check the housing loan interest rate to be a clear winner.