Availing an affordable interest rate to reduce the EMI payments is one of the primordial reasons why most borrowers opt for refinancing. Nonetheless, finding the desired interest rates through home loan balance transfer facility depends on several factors like a borrower’s credit score, financial stability and lender’s terms.
The first rule to initiate a home loan balance transfer is to search for a reliable lender offering lucrative services and benefits. Some NBFCs may advertise an attractive interest to convince borrowers to avail their services but simultaneously charge high processing charges.
Hence, it becomes crucial to remain informed about these factors that can help borrowers find a suitable lender.
Things to check before applying for a home loan balance transfer
Research about the new lender
The basic rule to find a better financial institution through home loan refinance is to compare various lenders in the market. If a lender offers a lower interest rate, blindly trusting their claims is not advisable. A borrower must check whether the interest levied by the lender is authentic, not a gimmick. Reading third-party reviews on the service quality and products can help decide why one should choose a home loan balance transfer to select that particular lender.
Gather information on the processing charges
Many NBFCs charge a foreclosure fee which can be relatively high. It is always important to check with the existing lender regarding the additional costs for clarity. Ideally, this amount is a small percentage of the outstanding loan balance.
Some HFCs also offer home loan balance transfer calculator to determine EMIs and the amount that can be saved after switching the home loan to a preferred lender. It can also be used to determine the amount receivable after investing in recurring deposit after the balance transfer.
These institutions also sometimes extend pre-approved offers on selective products like home loans, loan against property, etc. This feature eases out the loan application process for a first-time borrower. Check your pre-approved offer by adding your name and contact details on the lender’s site.
Check the credit score
In recent years, lenders have upscaled the loan approval standards and process. The borrowers are mandated to maintain a 750+ CIBIL and reliant credit history. Failing to do so can cancel the home loan balance transfer application. Even if a borrower with low credit obtains the feature, the interest rate and processing charges will be higher.
Determine the interest rate
Another factor to check before making a home loan balance transfer application is determining whether the lender is offering floating or fixed interest rates. Some HFCs levy a floating rate with a variable spread that can raise the interest rate after a few months. It is, therefore, necessary to confirm with the lender regarding the benchmarks and variables applied.
Read Also: Things you should know before taking a top-up loan
Check whether the lender offers top-up loan
Borrowers can easily reduce their EMIs repayment by availing a home loan balance transfer, which helps to access benefits from a top up loan on an existing advance. They can effortlessly receive up to Rs.50 lakh which comes with the flexibility of usage. This amount is substantial enough to deal with big-ticket expenses or emergency expenditure.
Planning the right time for refinancing
Ideally, the process of refinancing takes around 10-15 days from application date. The existing lender may require additional time to handover the land documents to a new lender. During this period, a borrower won’t be able to avail other loan disbursements. Therefore, it is crucial to plan the loan balance transfer timing only when there are no emergency monetary needs.
Following these above-mentioned steps can ease out the home loan balance transfer process. This also ensures that a borrower receives a better interest rate and makes efficient savings. So, choose a lender wisely and make the most out of our home loan without hassle.