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Home loans are one of the most significant financial commitments that a person takes in their lifetime. It is a long-term loan that is taken for a significant period of time, typically between 10-30 years, and is used to buy a house or a property. However, sometimes people may face difficulties in repaying the loan due to various reasons such as high-interest rates, poor customer service, and other issues. In such cases, they may opt to transfer their home loan from one bank to another to get better terms and conditions.
The process of transferring a home loan from one bank to another is known as Home Loan Balance Transfer (HLBT). In this process, the outstanding loan amount is transferred from the existing lender to the new lender at a lower rate of interest. The process of HLBT is a simple and hassle-free process and can be completed in a few steps.
Step 1: Check the outstanding amount and the tenure of the existing home loan
Before you decide to transfer your home loan, it is essential to check the outstanding amount and the remaining tenure of your loan. This will help you to determine whether the HLBT will be beneficial for you or not. You can check the outstanding amount and the remaining tenure of your loan by contacting your existing lender.
Step 2: Check the current interest rates offered by different lenders
The primary reason for transferring the home loan is to avail of lower interest rates. Therefore, it is essential to check the current interest rates offered by different lenders. You can compare the interest rates of different banks on their website or by contacting them directly.
Step 3: Calculate the savings on interest rate and other charges
After comparing the interest rates of different lenders, you need to calculate the savings on interest rates and other charges such as processing fees, prepayment charges, and other fees. You can use online calculators or contact the lenders to get the exact figures.
Step 4: Apply for Home Loan Balance Transfer
After you have decided to transfer your home loan, you need to apply for Home Loan Balance Transfer. You can apply for HLBT online or by visiting the bank branch.
You will need to submit the following documents along with the application form:
Identity proof
Address proof
Income proof
Property documents
Bank statement
NOC (No Objection Certificate) from the existing lender
Step 5: Get the Loan sanctioned and disbursed
Once you have applied for HLBT and submitted all the required documents, the new lender will verify the documents and check your creditworthiness. If your application is approved, the new lender will sanction the loan and disburse the amount to your existing lender to close your old loan account. After the transfer of the outstanding amount, the new lender will create a new loan account for you, and you will need to start repaying the loan to the new lender.
Lower interest rates: One of the primary reasons for transferring the home loan is to avail of lower interest rates. By transferring the loan to a new lender, you can save a significant amount of money on the interest rate.
Better customer service: Sometimes, the existing lender may not provide satisfactory customer service. By transferring the home loan, you can switch to a new lender who provides better customer service.
Reduced EMIs: By transferring the home loan, you can also reduce your monthly EMIs, which will help you to manage your finances better.
Additional features: The new lender may also offer additional features such as a top-up loan, which can be used for other purposes such as home renovation, education, or medical expenses.
Transferring your home loan from one bank to another can be a wise financial decision, especially if you can get a better interest rate or other favorable terms. It’s important to note that transferring your home loan can involve some costs and paperwork, but if done correctly, it can save you money in the long run. Be sure to weigh the pros and cons before making a decision, and consult with a financial advisor if you’re unsure.