How to transfer Home Loan from one bank to another today to reduce Interest rates

Are You searching Home Loan Transfer and Top up today offering banks in the Market? Know These Things Before Transferring a Loan.

transfer Home Loan from one bank to another

Banks have been slashing interest rates on home loans significantly in recent times. Various efforts are being made to attract customers. Newer borrowers as well as those who have a home loan from other banks are also being offered various types of loans. When it comes to home loan transfers, Holiday and gift vouchers along with low interest rates are attracting customers. With this, some people are showing interest in loan transfer. Let us know these details at once.

Can I Really Benefit From a Home Loan Transfer to a Bank with a lower interest rate? Or will it take a heavy toll?

What is a home loan transfer?

After taking a home loan from a bank for a while you may not like the interest rate and other things in that bank. 

In such a case, the bank of choice will have the option to transfer the home loan. This is know as Home Loan Transfer. 

It's kind of like that taking out a new loan. This means that you will transfer the loan to any bank. That bank will give you a new loan. If not, the amount will be paid to the bank where your existing loan is located. In the new bank, the interest rate applicable when taking a new loan, EMI will apply.

Can i transfer home loan from one bank to another? How to process

  • No Objection Certificate (NOC) is required for loan transfer from the Existing Bank first.
  • Along with the NOC, the bank also provides details of the outstanding loan amount.
  • We want to transfer both these loans to any bank or any lending institution. It should be handed over to that bank.
  • After processing them, the loan amount will be paid to the Existing Bank.
  • Once the loan amount is repaid, the old bank will cancel your loan account and provide all the documents to the new bank.

Is it possible to transfer home loan from one bank to another?

  • Home loan for five years: It is Better check home loan less than five years
  • In the case of a new borrower, i.e the first five years, the loan transfer is somewhat mixed. 
  • This is because most of the pre-paid EMIs on home loans go under interest. 
  • In such a case the burden will be lessened by switching to a bank with a lower interest rate. 
  • It is best not to transfer in the middle of the loan period. 
  • Because up to that point most of the amount you paid in the form of EMIs would go under interest. 
  • So if the loan is transferred in the middle then the interest burden will have to be borne again.

What next When there is a difference in the interest rate

If the difference between the existing loan interest rate and the interest rate in other banks is only 5 to 20 basis points, it is better not to make a loan transfer. If it is more than 25 basis points, you can think about transfer.

Can I switch into floating interest option

If your existing home loan is fixed then it is a good idea to transfer it to floating. This is because the RBI keeps changing interest rates on home loans from time to time. 

For the most part, interest rates continue to fall. So if the home loan interest rate is fixed in your old bank switching to floating will be beneficial. 

There is also no penalty on foreclosure charges for home loan due to floating interest rates.

The additional charges for home loan transfer may be burden

A loan transfer is a new loan. The transfer will still have to do paperwork as it did in the new loan. So we will transfer the loan to any bank. 

The bank officials will collect the processing fee, legal and valuation fees as well as stamp duty from you. 

Is there any charges for home loan transfer: There is a possibility of charging an additional charge of 0.25 per cent to one per cent on the outstanding loan. So it is advisable to take these factors into consideration while making a loan transfer as well.

What are the Penalty charges for home loan transfer

Some banks charge penalty for home loan transfer from the customer for the loan transfer. So it is a good idea to read the home loan documents thoroughly before making a transfer. It is better not to have any penalty for the transfer. 

If there is a penalty, it is necessary to know how much will be charged. This is because the money will have to be paid for loan processing in the new bank already. In addition to that, paying the penalty in the existing bank means that the additional burden will be borne.

Need to Get Life Insurance with Home Loan? Check home loan insurance benefits

Usually, we take a home loan. In addition to that, the bank officials suggest not to take insurance. The loan transfer will then ask you to take out insurance as well. However, in some banks, the authorities insist that the insurance must be taken properly. 

But do you need insurance along with the loan? At Is entirely up to you whether to take or not. You've right to reject the proposal of Home Loan Insurance offering or insisting any bank along with Home loan. 

Experts suggests that one time insurance for home loan is advisable instead paying every month emi, if you are a salaries person then it is more burden on your monthly income.

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