Is your Home Loan Interest Rates too high with existing lender?

Posted by Nikhil Pandey on October 20th, 2016

A housing loan is one of the most important financing resources that an individual borrower during their lifetime. Even a slight reduction in interest rates will help you save from making a big hole in your pockets. Therefore, banks and finance companies offer Home Loan Interest Rates that helps you transfer your existing loan from one bank or firm to another if at all you're not happy with the charges applicable to the loan process. Based on your good repayment track records, your good credit score, etc. you as a borrower can renegotiate with your current lender to let you avail lower interest rates. In case your bank doesn’t want to offer you any negotiation, you can transfer the home loan to a new borrower one the best options available.

In today’s inflating economy time, home loan balance transfer is an accessible and easy method you can opt for in order to take advantage of lower interest rates pre-vailing the market.

Home Loan Interest Rates process:

To make a home loan transfer borrower needs to submit an application to the current lender requesting transfer of the home loan to the desired lender. The existing banks will then give a letter of consent or no-objective (NoC) along with a statement indicating the full outstanding amount of the home loan. The borrower then has to submit all these documents to the new bank to which he or she wishes to transfer the home loan.

After receiving all the requisite documents, the new loan lender will sanction the loan amount to the current lender for account closure. After all the transactions are complete, the property documents are handed over to the new bank and the ECS/remaining post-dated cheque kept with the current lender are canceled. The new bank will then offer the borrower a new home loan for the balance amount based on the current home loan rates prevailing in the market, which they are offering to all home loan applicants. If the prevailing interest rate is lower, the borrower is given this same (lower) interest rate, making the switch beneficial to the borrower. The borrower will need to obtain the property documents from the current bank so that those are transferred to the new bank within a stipulated timeframe.

The new bank you switch the loan to will treat the transferred loan as a fresh one. You will, therefore, need to follow the procedure related to approval of new housing loan including credit appraisal, legal verification of property credentials, technical evaluation by the new bank, etc. 

There is a small amount of processing fee paid involved for Home Loan Interest Rates that could range between 0.25% to 1.5% of the home loan principal which is transferred or it could be a fixed processing fee. Some banks also levy administrative charges, legal charges, stamp duty and other miscellaneous charges. It makes sense to compare the total of these charges against the benefit of the reduced interest rate.

While transferring your housing loan, it is important you check the new lender’s terms and condition and ensure the lower interest rate is for few months. Teaser rates are very common these days which are available just for a limited period. You may end up paying a much higher interest rate on the Home Loan Interest Rates amount if you pitfall in such offers. It is advisable, if you’re suspicious on higher interest rates, its better you transfer your loan within 2-3 years of availing the loan. It makes sense because you’re already paying higher interest rates and it is likely that in the transfer process, you may end up paying a higher amount towards fees and other charges.

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Nikhil Pandey

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Nikhil Pandey
Joined: September 8th, 2016
Articles Posted: 30

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