Things To Know Before You Decide To Shift Your Home Loan To Another Lender

The home loan balance transfer feature is a unique solution available to existing home loan borrowers looking for better loan terms. It allows borrowers to transfer their existing debt to a new lender at a revised home loan interest rate or tenure. Naturally, such a provision can be a smart option for a long-term instrument like the home loan and has the potential to save you a considerable sum. However, to get value out of such an undertaking, you must have all your bases covered. To that end, here are 5 things to know before you opt for a home loan balance transfer.  

Current lender’s terms and conditions: The first, and most important, thing to know before you consider a home loan balance transfer is whether or not your current lender permits you to. Some lenders may have specific clauses in the loan agreement that will restrict you from opting for a transfer. This restriction may be for a certain period of time or it can be for the entirety of the loan. In any case, if there is such a restriction, then your only other option is to negotiate for a lower home loan interest rate. 

New lender’s fees and charges: A key part of doing a cost-benefit analysis when you consider switching your loan is to analyse the actual cost of transferring the home loan. When you transfer your loan, the new lender will also have their own set of fees and charges. Some of these include application fees, inspection charges, processing fees, administrative charges, transfer fees and others. Remember, these fees are very rarely flat figures and are usually deducted as a percentage. As such, they can amount to quite a sizable sum if you aren’t careful. 

Total savings: To calculate total savings accurately and with ease, your best bet is to use a home loan balance transfer calculator. Here, you can see the complete amount saved, both as interest and the total combined amount. With this figure, you can go ahead with the cost-benefit analysis with the assurance that your calculations are error-free. While a home loan EMI calculator can also help you reach this conclusion, it requires extra steps and can be tedious to do. Do not forget to account for the fees and charges at this step as this will help reveal if there is true value in this undertaking.  

Ideal time to opt for the home loan balance transfer: As with any financial undertaking, timing is key. You need to identify the best time to opt for a home loan balance transfer as there is a period in the tenure when such a switch isn’t advantageous. Ideally, you should ensure that you have at least 5 years of repayment to see value in a transfer. Even if the RBI slashes interest rates, switching under 5 years of repayment may not be wise as you also have to account for the cost of transferring. So, carry out a balance transfer as early as possible and not when you’re in the last leg of repayment.

New lender’s loan perks: The decision to switch lenders shouldn’t be based on a lower home loan interest rate alone. You should consider loan provisions and perks as well. Remember, you still have to service the loan and if you’re going to face difficulties or lose access to convenience-related perks, the switch may not be worth it. 

Getting the lowest home loan interest rate with a new lender shouldn’t be the only reason to opt for a balance transfer. You need to ensure that all the other factors align to make the undertaking actually profitable for you. This is why a thorough cost-benefit analysis is recommended before going ahead with anything. In addition to that, your market research must be intensive. You must scout for a lender that improves your borrowing experience in every way.

For this, a good option to consider is the Bajaj Housing Finance Limited Home Loan Balance Transfer. Opting to switch your home with this financial instrument opens doors to an array of perks and features. Here, you get access to a competitive home loan interest rate to help make your shift cost-effective. What’s more, you can opt for the special top-up loan that allows you to borrow over and above your existing loan amount. This sanction, of up to Rs.50 lakh, can be used freely for any obligation, serving as a financial safety net. Other perks include a minimal requirement for documentation and relaxed criteria, making the switch that much simpler. To avail these features and enjoy a hassle-free experience, apply online at the earliest.