One of the biggest financial responsibilities is a home loan. Now, it is essential to understand that if you opt for it, you are not bound to just one organization for the entire tenure. This is what exactly a home loan transfer is.
Undoubtedly, you are more inclined towards where you benefit the most. It is very important to be happy with the terms and conditions applicable to the home loan. Notably, lower interest rates are the top reason people switch home loans.
What is a home loan?
It is a credit facility provided by Banks and Non-Banking Financial Companies (NBFCs) to those planning to buy a home or land, build a house on their land, or renovate their home and maintenance needs.
Every month, a fraction of the principal amount and interest is paid through Equated Monthly Installments (EMIs). Also, one gains complete property ownership after the loan ends.
(Note: Both the interest and principal components qualify for a tax deduction.)
What is a home loan transfer?
A home loan transfer process involves moving your home loan from one lender to another for a better interest rate and various other benefits. It is a well-known fact that one goes for this process due to certain conditions like rising expenditures and inflation.
When one is burdened with a loan, a high-interest rate directly impacts personal finance, ultimately leading individuals to opt for a home loan transfer process. This process makes sense, especially if one has a longer tenure left to repay the amount.
How to transfer the home loan?
Now, instead of sharing a manual with you all, it’s better that I share my own experience on how I initiated the entire process. Around three years ago, I opted for a home loan for seven years. Recently, I came across the transfer concept and studied it on the web. I even had a word with one of my friends in the finance sector, who guided me on how to do it.
Here is a step-by-step guide –
1. Write an application to your current lender
Firstly, don’t forget to inform your lender that you are seeking a loan transfer. Keep in mind to carefully list out the reasons.
2. Collect the NOC
Collect the No-objection certificate from your lender, as it will be required by the new lender when you file your application.
3. Hand over the documents
Hand over the documents to your new lender. Apart from all the essential documents, property papers, loan balance, and interest statements are also to be submitted to the lender for the home loan transfer.
4. Confirmation from the old lender
After handing over the documents, await final confirmation from your old lender concerning the closure of your loan account. This certifies that the loan contract has ended, as have the terms governing it.
5. Pay the fees and start afresh
Sign a contract with your new lender and pay the due fees. Once complete, you can pay your next month’s EMI to your new lender.