Home loans are considered an ideal solution to reduce the financial burden while purchasing a dream home. Home loans are known for their flexible payment mechanism. One of the facilities making home loans flexible is a loan balance transfer. Customers can enjoy the lowest home loan interest rate by opting for a loan transfer.
Understand Home Loan Balance Transfer
A home loan balance transfer refers to shifting a home loan balance from one institution to another to save on loan costs with decreased interest rates. The transferred home loan is a new loan account with the new lender. Therefore, borrowers need to consider loan eligibility, loan tenure, interest rates, and processing fee as they check before applying for a new loan. The process of switching home loans and lending institutions is called a home loan balance transfer.
Can Borrowers Transfer a Home Loan Multiple Times?
Yes, borrowers are allowed to transfer a home loan multiple times. Opting home loan transfer multiple times is fine if borrowers find it profitable. There are a few cautions for borrowers mentioned below:
- Charges to Bear
Borrowers should consider that there are processing fees and prepayment charges that borrowers need to bear every time they transfer their home loans. Borrowers can be devoid of the primary objective of transferring the loan – the savings on loan cost. Instead, they may end up with higher loan costs.
- Documentation
Multiple home loan transfers can be time-consuming. Every time borrowers go through the home loan transfer process, they must complete document requirements. Although it is minimal with most banks, it can take time to complete documentation formalities multiple times.
- Feasibility
Borrowers are advised to opt for home loan transfers in the early stages of the loan tenure to make it a feasible choice with reduced interest rates. If the loan tenure goes deeper, loan transfer makes less sense. Because most of the loan portion is paid in the earlier stages of the loan tenure, the lowest home loan interest rate can help borrowers to reduce their loan costs, but it may not be feasible.
Things to Consider While Opting for Home Loan Transfer
- Eligibility for home loan transfer
As mentioned, the lender needs to check the borrower’s loan eligibility before approving a home loan transfer application. Generally, it is easy to meet the eligibility criteria with leading banks.
- The age limit is 18-60 years for salaried applicants and 18-65 years for self-employed applicants.
- The minimum monthly salary is Rs.20,000 for Delhi, Mumbai, Bangalore, Pune and Chennai and Rs. 15,000 for other cities.
- Applicants working with a private company should have a bachelor’s degree. It is optional for individuals working in multinational and public sector companies.
- Companies looking for a home loan transfer should have a minimum annual net income of Rs.2,40,000 in Delhi, Mumbai, Pune, Chennai and Bangalore. For other cities, it is Rs.1,80,000. The business should have been established at least three years ago.
2. Negotiate Interest Rates
Individuals meeting the eligibility criteria well can negotiate with the new lender for favourable loan terms. Lenders can consider the requests of the borrower with an excellent credit score and a stable source of higher income. However, they can request the existing lender to reduce the loan tenure before approaching another lender.
3. Loan Tenure
Many borrowers may consider a home loan balance transfer for a flexible repayment tenure option. The tenure for home loan transfer can be extended up to 20 years with leading banks. It helps borrowers to repay the loan conveniently. However, borrowers can talk to their existing lenders to increase their loan tenure.
4. Calculate Savings
Customers should estimate their savings with the option of a home loan transfer. This calculation beforehand helps borrowers determine if a loan balance transfer can lower the loan than the current interest and EMI outflow. It is an easy task to use an online home loan transfer calculator.
Thus, it is possible to transfer home loans with different lenders multiple times. Check how well it makes sense considering overall savings. Shift the home loan balance from one lender to another after ensuring that the saving is higher than the incurred costs.