How to Transfer Your Home Loan
Important Things to Watch Out For Before You Decide On Transferring Your Loan:
1. It is always advisable to switch loan during the early years of loan repayment as you would have already paid out a substantial amount of the interest due initially. Otherwise switching loan after most of your interest has been repaid; it will hardly help you to save some money.
2. If your only reason for loan transfer is to save on interest due, you must always compare the total loan cost between the two offers. When you find that there is a significant amount of interest to be saved from the move, and then only go ahead with your refinancing plan.
3. As you are quite aware of the processing fees charged for loan transfer, however you must factor in these costs before making your move. Also remember that for a home loan switch you would be required to go through all the procedures involved afresh, that includes a credit appraisal, legal verification of property documents and technical evaluation with the new bank, etc. The new lender will approve your loan only when all these conditions are met.
4. If you don't want to get into any hassle later on, then don't delay in getting statements from your current lender stating that property documents will be dispatched within a certain time frame.
5. Remember you will not get the benefit of loan switch, if you have been irregular with your EMI's with your current lender or just have two or more years left in the completion of your loan tenure.
6. There are many low-income home loan borrowers who take teaser loan in which 'they pay a very low initial' interest rate, which contractually rises after a stipulated time frame. Teaser loan try to attract borrowers by offering them a very low interest rate and small down payments, claiming that they should be able to refinance before the rate increases. However, it's a costly trap, as when these borrowers try to refinance before the increases occur, they are not found eligible for a standard loan. Eventually these borrowers end up paying increased EMP, which they cannot afford. So you must avoid the teaser loan route of loan refinancing.
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