How to go forward with a Home Loan Balance Transfer

In general, home loans are long-term loans. This implies that you will have to pay off the loan for an elongated period to close the loan. In addition to that, the EMIs are also quite chunky and might even sum up to a significant amount of your monthly income.

There are a number of home loan lenders in India who offer loans at affordable rates of interest. Some of the lenders even offer the Home Loan Balance Transfer provision for their customers. The main idea behind the loan balance transfer is to save up on the overall loan.

In general, most lenders charge the maximum in terms of the payable interest in the initial years of the home loan disbursement. Ideally, if you avail a home loan balance transfer within the first 4 to 5 years of availing the loan, you will be able to save up a significant amount on the home loan.

However, you should not blindly avail a home loan balance transfer scheme just because the new lender is offering a lower rate of interest. There are a number of things which needs to be considered at the time of availing the transfer to make sure that you are gaining some advantage out of the whole transaction. Given below are a few things that you should figure out before availing a home loan balance transfer:

1) Calculate the prepayment charges and processing charges: This cost has to be incurred by you at the time of closing the loan, thus, it is important to make sure that you are saving enough from the whole transaction. If the amount that you will be saving after paying off all the charges and transferring the home loan to a new lender is not decent, then the transfer might not be worth it.

2) Calculate the charges that you will have to incur for the new loan: It is important to calculate the charges that you will have to pay in addition to the capital and interest amount of the new home loan. These charges will include the likes of the processing fee, the transfer fee, and the application fee. After paying it all off, if you are saving a significant amount of money on the home loan, it might be a wise decision to transfer the loan.

3) Look for hidden charges: Go through the offer documents carefully and find out if there are any hidden fees and charges which might eat into your savings from the home loan balance transfer.

4) Check your eligibility before applying for the home loan balance transfer: The eligibility criteria are likely to differ from lender to lender. However, you should check the eligibility criteria and make sure that you are eligible for the new home loan. The eligibility criteria for the home loan balance transfer are discussed below.

Eligibility Criteria for Home Loan Balance Transfer

The home loan balance transfer eligibility criteria usually vary from lender to lender. However, some of the general factors are being listed below:

The applicant should have an existing home loan which has been availed from a different lender.

In general, most lenders require the applicants to have paid off at least 12 EMIs on the existing loan. However, this is subject to change on the basis of the terms of the lenders.

On the part of the applicant, there should have been no defaults in the payments of the EMIs of the existing loan.

Most lenders require the applicant to have the registration for the property. It is highly likely that the application will be rejected even if the possession has been handed over but the registration process has not been completed.

The most important factor to be taken under consideration at the time of applying for a home loan balance transfer is the calculation. As an applicant, you have to make sure that you have calculated the outcomes for both the existing loan as well as the new loan. This will help you decide the final outcome of the home loan balance transfer and you will be able to take a decision accordingly.

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