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Home Loan Balance Transfer - Hurdles and Procedures

Author: Arwind Sharma
by Arwind Sharma
Posted: Dec 19, 2016

You’re halfway there. Your dream of owning a house is almost a reality. But looking at the decreasing trend of interest rates, you might be tempted to transfer your home loan from one bank/NBFC to another. Even though it might seem exciting initially, it might not be as enticing when you take a closer look.

Financial experts say the procedure of transferring a home loan from one lender to another isn’t as easy as it may seem.

Let’s take a look at some of the hurdles one will have to face before transferring the home loan balance.

    • 1.) Ambiguity with respect to documents: While borrowing, we might ignore or overlook the the fact that the lending bank/NBFC hasn’t issued a receipt for the original documents submitted to them. This can be a major hurdle at the time of transfer, since this means a lot of unnecessary and hassling paperwork for you.

      • 2.) Miscalculation of principal amount: The letter containing the details of the principal amount that needs to be paid to foreclose the loan is usually poorly drafted. This is caused by the time gap that occurs as the correspondence ensues between the two banks. Not only does this take a lot of time, it’s stressful, since the actual process is going nowhere.
      • 3.) Deliberate delayance: This occurs when the current bank isn’t willing to let go of your business and therefore, they might not comply with the request you make as a borrower with respect to the issuance of foreclosure letter on time.
      • 4.) Getting back the originals: This is another issue that can cause delays, or sometimes throw off the whole process, since the bank holds your documents. If the bank or NBFC isn’t very sporting, then returning the original documents may not happen, unless you’re ready for a hard and long fought battle. Ideally, the current transacting bank should transfer the document to the new bank automatically. Unfortunately, such things rarely happen. This usually only happens when the bank values professional ethics more than anything else.
      • Apart from this, some banks might levy home loan transfer charges on the borrower. Even with the potential of these hassles, it can be worth it to transfer your home loan. The lower interest rate can eventually add up to substantial savings.

    Although there are obvious disadvantages, transferring your home loan balance can have a number of advantages.

    Low Monthly Installments

    Since you’re paying a lower amount on loan, you pay lesser installments every month.

    Balance Transfer Calculator

  • There’s an option of calculating the amount of savings that can be made as well the top-amount that can be availed when you make the transfer to the other bank. With the help of a home loan balance transfer calculator online, you can calculate exactly how much you’ll pay.

  • Home Loan Transfer Rates

    When you’re looking at a home loan transfer, other banks can offer highly competitive rates, which help you in saving a lot of money that you would have had to pay otherwise.

    Flexible Repayment Schedule

    A good bank understands its customers and drafts various repayment schedules, taking into consideration the needs of the transferring customer, so they can avail maximum benefits.

    Transferring your home loan balance can be a cumbersome process, no doubt. But it’s important to look at the impact that can bring in. By transferring your home loan to another bank, it can leave you with a lot more financial breathing room, helping you make other investments.

    Happy transferring!
About the Author

Arwind Sharma is a financial advisor with an experience of more than 7 years. He has worked for topmost financial firms in India and has been a visiting faculty at many reputed institutes in India.

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Author: Arwind Sharma

Arwind Sharma

Member since: Oct 18, 2015
Published articles: 25

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