Ralph Waldo Emerson stated, “A house is made of bricks and beams. A home is made of hopes and dreams.”
The quote means that merely bricks do not make a house; it is made of the dreams, hopes, and aspirations of the buyer. In most cases, a person purchases or builds a home only once in his/her lifetime, and this is the reason they want their experience to be hassle-free.
Purchasing a house is never concerning an individual; instead, it is directly related to the family, savings, and future of a person and this is the reason it happens to be so special to the people. People invest all their savings in their dream house; therefore, the decision relating to it mustn’t go wrong.
Home loans are considered to be the easiest way out because they save a person from waiting too long to save money and then buy a new house. This facility has brought an increase in the number of houses and real estate owners. When we talk about the banking sector, there are numerous banks offering home loans. Therefore, it is very essential to choose the right bank or institution, and most importantly, a suitable loan, which will ensure fulfilment of the needs of clients in the form of a monetary fund.
But, what if you want to change the bank or financial institution from which you have borrowed the money? Gharpedia, through this blog, enlightens you on home loan balance transfer, along with home loan transfer chargers, eligibility criteria, and factors for home loan balance transfer.
What Is Home Loan Balance Transfer?
Home loan balance transfer is the process of ending the contract of borrowing and lending money (generally a home loan) from one bank and after consideration, giving it to another organisation or bank. This facility is mostly present in all financial institutions. This process is also known as the phenomenon of refinancing. The whole process aims to safeguard the interests of both parties so that none of the parties is otherwise at a loss.
Home Loan Balance Transfer Eligibility Criteria
Before considering a home loan transfer, you should check whether you are eligible or not. The home loan balance transfer eligibility criteria are as follows:
- The property that requires a loan should be ready to occupy or is already occupied.
- There should be at least 12 EMIs already paid.
- There should be no outstanding dues from the previous loan amount.
Top Factors for Home Loan Balance Transfer
The top factors to consider while planning for a home loan balance transfer are as follows:
The Switch-Over or Home Loan Transfer Charges
The switch-over is a phenomenon where there is a shift from one lender to another who provides more facilities, or in simple words, lower interest rates. This switch-over is possible and permissible. But it has certain charges that vary from one bank to another. Generally, home loan transfer charges are between 0.5 to 1% of the outstanding principal amount. There is also the option of negotiating with the bank in order to reduce the switch-over charges or bank fees.
Experts suggest that if the switch-over charges exceed the expectations or the internet rate of the other lender, then it is better to avoid them because they will anyway sum up to the same amount. Thus, the home loan transfer charges are a very important factor to take into consideration while opting for a switch-over or bank transfer.
Interest Rate Of The Other Bank
The main reason for shifting or opting for the process of a home loan balance transfer is the interest rate. If the other bank is offering a lesser interest rate, then the borrowers show an inclination towards that bank. However, it is not a prudent move to opt for a switch-over or bank transfer if there is no significant change in the interest rate offered by the other bank. Make sure that you are 100% sure before switching to another bank because the whole process of home loan transfer to another bank involves a lot of paperwork and hassles. This is yet another piece of advice to consider while planning for a home loan balance transfer.
The Residual Amount Of The Home Loan
Another important factor to consider while opting for a home loan balance transfer is the residual amount or the balance amount of the actual loan amount that is unpaid. It is suggested that if the amount left is less, then do not opt for a shift or transfer. On the other hand, if the amount left is huge and the interest rate is too high, then opt for a home loan transfer to another bank. There is no point in putting in so much effort and doing paperwork if the amount left is very less.
The Overall Cost Of Transferring And Additional Charges
The amount charged by the banks before the transfer of the home balance is not the only charge. The whole process of home loan transfer includes charges such as transferring charges, processing charges, and much more. If the overall cost of the transfer or additional charge is high, then avoid the switch or transfer altogether.
Rules Of The New Loan
Before opting for the new loan, make sure to go over the terms and conditions of the new financial institution providing the loan. Do not go for a home loan balance transfer just after seeing the low rate of interest. Carefully consider the terms and conditions of the institution giving the loan; it can have a major impact on the whole process. Therefore, being thorough with the rules of the new loan-giving institution is very important.
Being Aware Of The Reviews Of The New Loan Giving Institution
Before opting for the process of Home Loan balance transfer, it is very essential to be aware of the reviews provided by previous clients. This will give a better understanding of the type of service provided by the institution and the claims made by them.
Conclusion
The process of switching over or a Home Loan balance transfer is an entire process on its own. It directly deals with the remaining amount that you are paying for your house. Deciding in haste can cause a lot of problems, therefore it is very important to consider the above-mentioned factors. People opt for transferring even when they find a small change in the interest rate offered by the other bank. A thorough research is a must before entering into a new contract. Do not forget to consider all the important factors before opting for a home loan balance transfer.
Know the process of applying for a loan at:
How To Apply For A Home Loan? Well Begun Is Half Done
Author Bio
Harshada – Harshada Shankar Abitkar, an Interior designer by profession.
