Home loans help people fulfill the desire of buying their dream home. Home purchases can be expensive, hence it is important to know how to optimize your home loan. A home loan transfer can help lower the balance and establish good cash flow.
Home loan transfer is useful but required careful research. Compare your current home loan interest with new rates and find a preferred lender. Calculate your savings and collect all required documents relating to income, employment, and residence. You must then ask for a consent letter that reveals the outstanding loan amount from the old lender, which shall be submitted to the new lender. Once you are repaid, your previous loan account closes. At this stage, your property documents are handed over by the old to the new lender and you start paying your EMIs at a lower interest rate.
A good credit score i.e. 750 and above, and a great payment track record can help in application approval. Opt for a home loan lender who links the rates to MCLR; this shall help you can avail lower rates in cases of a repo rate cut.
The refinancing should be done within the initial 4 to 5 years of loan services since anytime later might not be a feasible option. However, home loan transfer may incur various charges such as processing fees, penal interest among many others. A cost-benefit analysis can help you make an informed decision. Read and understand the terms and conditions carefully to choose the best.