How to transfer your Home Loan?

These are interesting times for home buyers as new and better regulations come into effect in support of them. Times are even greater for home loan borrowers as recent cuts to the interest rates mean they can benefit from the same. Thus, the chances are high that you are paying higher interest rates on your home loan than you should. Or possibly you are not happy with the services that your bank is providing you with.

There is nothing to be afraid of and as you are not stuck in a limbo. In such cases, you can always opt to transfer your home loan to a different lender. Here is an easy guide for you to transfer your home loan and save your hard-earned money.

  • Is it beneficial?

The whole point of you switching to a different bank or lender is to save some money as you are paying higher interest rates. If you spend some time to analyze your situation before taking a call, you will benefit a lot from the same.

  • Transferring a home loan with fluctuating interest rate is better than a fixed interest rate home loan, as pre-closure charges are higher on the later.
  • Transfer of a long tenure home loan gives you the flexibility of better benefits.
  • Check with the interested bank regarding all charges (including all documentation).

Once you are convinced that the transfer will save you some money, you should take the next step.

  • Bank Clearance

To transfer your existing loan to a different bank you would need to get a no objection certificate from your current bank. Things can get interesting here, as your current bank might offer to reduce the interest rates. You can bargain at this point and get an even better rate from the new bank, but it requires quite some efforts. Apart from the NOC, you need to get a letter of foreclosure along with all documentation with your current bank and your history of payment with the bank.

  • Application

Now that you have procured all the necessary documents, it is time to apply for a home loan with a new bank of your choice. The new bank would require the set of documentation mentioned in the above step along with proof of income, proof of ownership of house etc. The bank will then verify the documents and check if you will be able to repay the loan.

  • Approval

The approval process might differ depending on the bank that you choose. But in general, they carry out a background verification process which includes:

  • Verification of ownership authentication
  • Re-evaluation of the home loan application
  • Verification of your credit history with other banks and financial services

If needed the new bank might ask you for additional supporting documents. Once the bank is convinced with all the paperwork, they will approve the loan and send across a letter with interest rates and other terms and conditions. It is at this moment that you have to take the final call, either to move to the new bank or stick with the old bank with a better interest rate.

  • Final Switch

Assuming you move to a new bank with lower interest rates, you would need to wrap up the documentation with both the banks. At times, the situation might get a bit tricky as both the banks would require documentation from the opposite side to continue with the process. The easiest option is to get representatives from both banks and clear out the air.

The above steps should help you out with transferring your home loan to a new bank irrespective of what reasons you have for the switch. The process outlined here is quite generic and the nitty-gritty might differ from bank to bank. If the assessment phase reveals that you can save a decent sum of money, even though the process can be a bit clumsy, you should go for it.


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