With the growing competition among the lending institutions to offer home loans at a competitive rate, there is a wide disparity in the interest rates on the loans borrowed about 5-6 years ago and now. In such a situation it only makes sense from the existing home loan borrowers to transfer their loan to a bank that is offering the best interest rate and save a lot of money on their repayments. However, although it is quite easy to transfer the loan, you must be cautious and carry out the process carefully. The following tips can greatly help you in your pursuit.

Before you initiate the home loan transfer process, it is important that you first analyse your current situation and then decide the benefits of transferring the loan. If you have opted for a fixed rate loan, then you would have to pay the pre-payment charges for the transfer. The amount would add to your loan cost. However, if you have a floating interest rate, then transferring the loan to a lender with lower interest rate would be beneficial. Make sure that you are aware of the hidden charges involved with the transfer. If the amount is too much, then it would be futile to transfer since it would ultimately add to your cost.


Once you are sure transferring loan will be beneficial for you, the next step is to get an NOC or the no object certificate from your existing bank, which you have to submit to the new bank along with other documents including foreclosure letter, and the loan repayment statement. The process usually takes about 1-2 weeks during this stage; the existing bank would try to retain you by offering a reduction in the interest rate. It is best to take this offer and get a counter offer from another bank, which would mean that you have an added advantage with your repayment.

Once you have got all the clearance letters from the existing bank, it is time to apply at the new bank. The bank will evaluate your application, and as per your repayment history, it would decide your eligibility status and the interest rate. Also, you may have to submit a few documents as required by the bank, which differs from lender to lender. The new bank will at this stage carry out a background check on your income, work status, asset, and the market value of the home before making a new offer. This process usually takes about 3-4 weeks.

In the final stage, you would have to complete the documentation process. Both your old bank and the new lender will have a few specific requirements to complete the transfer process. This is the most critical time as the old bank will release all your property documents only if gets the payment of the principal balance amount while the new bank will release the payment only if it is satisfied with all the documents. To avoid the hassles, it is best advised to work with an expert realtor who will negotiate the process with the banks on your behalf.


Please enter your comment!
Please enter your name here