If one wants to take advantage of the falling interest rate regime and is not too happy with the lender with which he is servicing his home loan, he has the option of refinancing or opting for a home loan balance transfer. If you are in the early stage of your home loan tenure, here are the things to take note of if the idea of a home loan balance transfer has been playing on your mind.
A bank offering you a home loan balance transfer may make it sound like just a signature and an NOC from your existing lender, but the process of a balance transfer in reality is not that simple and requires careful consideration. Firstly, a home loan transfer makes sense only if you are servicing a loan at a higher interest rate than its counterparts in the market, you wish to lower your EMI and improve your cash flow.
A refinancing or a balance transfer will only make sense if your current lender is not flexible and is unable to give you some flexibility in your repayment process. This is however an unlikely phenomenon as banks are more than happy to reset the interest rate on your existing loan as they would not like to let go of a customer. Also if you wish to lower your EMI, there is no reason why your existing bank cannot do so, especially if you have been a diligent borrower making all your repayments on time.
Not the cheapest option
If this is sounding like a campaign against home loan balance transfers, it is because we want to tell you that this option comes with costs such as a processing fee that will be charged by your new lender as well as some other charges like stamp duty and the likes that a customer is required to pay but is not informed about upfront. Therefore, a refinance may prove to be costlier than you thought it was. But in the unlikely event that your existing lender is not even ready to give you a patient hearing, here are the things to consider while opting for a balance transfer:
A time taking process
If you have decided to go through the process of a home loan balance transfer, do bear in mind that it will not happen overnight because it is almost as long drawn a process as getting a new loan sanctioned and you will have to go through the entire rigmarole of paperwork all over again.
Opt for a balance transfer in the early stages of home loan tenure
In the earlier stages of your home loan tenure, the interest component of your EMI is high. Thus it is wise to go in for a refinancing option in the early stages of your home loan tenure. If you have only a few years left in repayment of your home loan, incurring additional expenses with a balance transfer, not to mention the hassles it involves with paperwork and the time taken – not worth the effort. Further if you are planning to move out of the property soon, a balance transfer is not a good idea for you.
Do it for the right reason
In conclusion, it is fair to say that it is wise to opt for a balance transfer only when your current lender refuses to listen to any request to reset interest rates or any other service request has not been paid heed to. But if you are contemplating a home loan balance transfer because your track record of repayment is not great with your existing lender, you can be rest assured that no new lender will be willing to take you on as a borrower as well! Whether it is a fresh loan or a refinance, a CIBIL score of 750 is therefore a must!
Author :- http://www.moneycontrol.com/
Reposted By:- http://www.credit4loan.com/
A bank offering you a home loan balance transfer may make it sound like just a signature and an NOC from your existing lender, but the process of a balance transfer in reality is not that simple and requires careful consideration. Firstly, a home loan transfer makes sense only if you are servicing a loan at a higher interest rate than its counterparts in the market, you wish to lower your EMI and improve your cash flow.
A refinancing or a balance transfer will only make sense if your current lender is not flexible and is unable to give you some flexibility in your repayment process. This is however an unlikely phenomenon as banks are more than happy to reset the interest rate on your existing loan as they would not like to let go of a customer. Also if you wish to lower your EMI, there is no reason why your existing bank cannot do so, especially if you have been a diligent borrower making all your repayments on time.
Not the cheapest option
If this is sounding like a campaign against home loan balance transfers, it is because we want to tell you that this option comes with costs such as a processing fee that will be charged by your new lender as well as some other charges like stamp duty and the likes that a customer is required to pay but is not informed about upfront. Therefore, a refinance may prove to be costlier than you thought it was. But in the unlikely event that your existing lender is not even ready to give you a patient hearing, here are the things to consider while opting for a balance transfer:
A time taking process
If you have decided to go through the process of a home loan balance transfer, do bear in mind that it will not happen overnight because it is almost as long drawn a process as getting a new loan sanctioned and you will have to go through the entire rigmarole of paperwork all over again.
Opt for a balance transfer in the early stages of home loan tenure
In the earlier stages of your home loan tenure, the interest component of your EMI is high. Thus it is wise to go in for a refinancing option in the early stages of your home loan tenure. If you have only a few years left in repayment of your home loan, incurring additional expenses with a balance transfer, not to mention the hassles it involves with paperwork and the time taken – not worth the effort. Further if you are planning to move out of the property soon, a balance transfer is not a good idea for you.
Do it for the right reason
In conclusion, it is fair to say that it is wise to opt for a balance transfer only when your current lender refuses to listen to any request to reset interest rates or any other service request has not been paid heed to. But if you are contemplating a home loan balance transfer because your track record of repayment is not great with your existing lender, you can be rest assured that no new lender will be willing to take you on as a borrower as well! Whether it is a fresh loan or a refinance, a CIBIL score of 750 is therefore a must!
Author :- http://www.moneycontrol.com/
Reposted By:- http://www.credit4loan.com/
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