List Of Clauses That Needs To Be Checked While Availing Home Loan Transfers

If you are not happy with your current home loan then you have the ability to transfer your loan to another bank. The process of home loan transfer is the same as applying for a house loan. The bank requires you to undergo the same process of application and documentation. Though this does not guarantee that the transfer you apply for will be approved. If you do not meet the eligibility criteria of the bank your application will be rejected.

Before you consider a home loan transfer there are a number of steps that you must follow to help the transition of your home loan from one bank to another be smooth.

Some things you need to keep in mind when applying for a home loan transfer:

1. NOC

The first thing you must keep in mind to start the process of your loan transfer is write a letter to the existing lender requesting the transfer. Based on your letter, the bank will provide you with a NOC as well as an official statement mentioning the amount of loan remaining to be paid. This statement must be provided to the new lender to help sanction your loan.

2. Penalty for prepayment

A prepayment penalty is sometimes charged to the borrower when they are transferring their loan to another housing finance company. This fee is usually between 2 to 5 percent of the outstanding loan amount. Some banks do not charge this fee but if your bank does, you can attempt to waiver the fee by negotiating with them.

3. Processing fee

Since the home loan transfer is basically a home loan application in the eyes of the new lender, you will be required to pay the processing fees again. Borrowers are generally advised to undergo a loan transfer only in the initial years of the loan repayment. If you want to get a loan transfer a couple of years later, you might end up spending more money since you have already repaid most of the principal amount.

4. Current interest rate

The current interest rate charged for home loans must be taken into consideration when you apply for a home loan transfer. If the interest rates are unfavourable you must consider waiting before you transfer your loan to another bank.

5. Home loan application

Your home loan transfer is basically a new application for a home loan. Hence you will be required to provide all the same documentation to get your loan accepted by the bank. You will have to undergo a fresh credit appraisal, legal verification of property documents, technical evaluation all over again.

Before you apply for a home loan transfer, conduct a detailed analysis of all the available banks before choosing one