Borrower-friendly features and benefits on home loans offered by leading lenders have helped the financial market for this product exponentially. The PMAY CLSS scheme has also played a significant role to help individuals belonging into EWS, LIG, and MIG sections of the population access to affordable housing solutions.

One of the features that are benefitting borrowers is home loan transfer facility. This facility enables you to transfer or switch your housing loan from one lender to the other.

When should you opt for a home loan transfer?

An increasing number of borrowers in India are switching their housing loans to more cost-effective options. Typically, one shift a home loan balance to a new lender in cases where the current lender’s terms seem unfavorable or they are unwilling to negotiate on new ones.

Borrowers usually tend to go for a home loan takeover to receive better interest rates on their credit amounts and benefit from zero part-prepayment and foreclosure charges, low processing fees, etc. Switching to a new lender offering lower interest rates is the best go-to option if one has a longer tenor left to repay. This is how you reduce your EMIs with a home loan balance transfer and save substantially on your interest’s outgo.

Tips to keep in mind when opting for a home loan balance transfer                                   

Here’s what you can make the most out of a home loan transfer –

  1. When you avail a new loan, your new lender will verify your repayment history and credit score before approving the advance. It’s advisable to keep a sound credit score of 750 or above and a clean repayment track record to enjoy a hassle-free loan approval.

There are numerous financial institutions and NBFCs offering housing loans at attractive interest rates and a host of innovative features. If your current lender links loan interest rates to the base rate, you can opt for a lender that connects their rates to MCLR. This way, you benefit from repo rate cuts and enjoy more transparency.

  1. Always opt for a home loan balance transfer in the initial 4-5 years of servicing your loan – when you generally pay a high rate of interest. Use a home loan transfer calculator to check how much you’re saving in total and then make an informed decision.
  2. A balance transfer involves several charges such as processing fees, EMI bounce charges, pre-payment and foreclosure charges, penal interest and many more. Therefore, perform a cost-benefit analysis before going for a home loan takeover. Proceed with the switching process only if it shows financially feasible. Also, use a home loan EMI calculator to calculate your EMIs after you refinance. This way, you can reframe your budget to accommodate the current changes.

Note that you may have to submit all the documents needed to apply for a home loan in India when you avail this facility. Also, the new lender asks you to pay processing fees and other several other charges when providing this facility.