Planning to shift your home loan- Know this!
It may be tempting to shift your home loan to a lower rate of
interest. However, one must precaution before taking final decision.
The repo rate cut by the Reserve Bank of India has prompted
almost all banks and lenders to cut their base rate. However it is important to
keep in mind that while switching to a new lender, interest rate is not the
only thing that you should consider. Here are pointers to consider while
deciding to shift the home loan to a new lender:
Negotiate with the existing loan provider: Switching the home loan provider involves going through the same process you incurred while applying for the loan in the first place. The new loan provider will conduct a credit appraisal, check your current credit history and score, legal verification of property documents and technical evaluation and a loan will be approved only when conditions are met. In the interest of time and effort you may try to negotiate with your existing loan provider for better interest rates or terms and conditions on the loan. Given the competitive market conditions, banks are keen to retain loyal customers and hence in all likelihood they will be able to provide you negotiated interest rates.
Compare interest rates vis.a.vis the left over loan tenure: Yes, it is essential to compare the interest rates however while factoring in the interest rate, calculate the left over tenure of the loan. If you have just started the loan account and are in the initial years of servicing the EMI, then switching to a lower interest rate may be beneficial option that can save you some money. However, if you are nearing the end of the loan tenure then switching the loan may not be a money saver option.
Factor in costs attached to moving the loan: There are costs attached to switching your loan. These may include processing fees of the new bank, expenses of vetting the property, documentation cost, stamp duty and insurance cost. Do factor in all these costs and compare if it’s saving you time, money and effort before switching the loan.
The National Housing Bank is considering allowing lenders to levy pre-payment penalty on housing loan customers who transfer the outstanding amount to another lender in the first two years of the loan tenure. Keep a track of this move before you decide to switch the home loan provider.
Check your credit score and report: If you decide to switch the home loan ensure to check your credit score and report. The lender you are deciding to switch to will definitely check your credit report and score with CIBIL before deciding to accept your loan transfer application. If you have a poor credit history and low credit score chances are that the lender may refuse your loan transfer application. Therefore, ensure that your credit history is impeccable and you have a high credit score before you apply for the transfer of the home loan to a new lender.
The revolution in the retail lending market in our country, propelled by availability of credit information on the borrower, has shifted the power in the hands of the consumer. Today consumers with a good credit history and high credit score are most sought by banks and credit institutions. With consumer truly becoming the king, it’s vital to decide wisely on choosing most feasible credit opportunities to fulfill your dreams and aspirations.
Negotiate with the existing loan provider: Switching the home loan provider involves going through the same process you incurred while applying for the loan in the first place. The new loan provider will conduct a credit appraisal, check your current credit history and score, legal verification of property documents and technical evaluation and a loan will be approved only when conditions are met. In the interest of time and effort you may try to negotiate with your existing loan provider for better interest rates or terms and conditions on the loan. Given the competitive market conditions, banks are keen to retain loyal customers and hence in all likelihood they will be able to provide you negotiated interest rates.
Compare interest rates vis.a.vis the left over loan tenure: Yes, it is essential to compare the interest rates however while factoring in the interest rate, calculate the left over tenure of the loan. If you have just started the loan account and are in the initial years of servicing the EMI, then switching to a lower interest rate may be beneficial option that can save you some money. However, if you are nearing the end of the loan tenure then switching the loan may not be a money saver option.
Factor in costs attached to moving the loan: There are costs attached to switching your loan. These may include processing fees of the new bank, expenses of vetting the property, documentation cost, stamp duty and insurance cost. Do factor in all these costs and compare if it’s saving you time, money and effort before switching the loan.
The National Housing Bank is considering allowing lenders to levy pre-payment penalty on housing loan customers who transfer the outstanding amount to another lender in the first two years of the loan tenure. Keep a track of this move before you decide to switch the home loan provider.
Check your credit score and report: If you decide to switch the home loan ensure to check your credit score and report. The lender you are deciding to switch to will definitely check your credit report and score with CIBIL before deciding to accept your loan transfer application. If you have a poor credit history and low credit score chances are that the lender may refuse your loan transfer application. Therefore, ensure that your credit history is impeccable and you have a high credit score before you apply for the transfer of the home loan to a new lender.
The revolution in the retail lending market in our country, propelled by availability of credit information on the borrower, has shifted the power in the hands of the consumer. Today consumers with a good credit history and high credit score are most sought by banks and credit institutions. With consumer truly becoming the king, it’s vital to decide wisely on choosing most feasible credit opportunities to fulfill your dreams and aspirations.
Happy Investing
Source:Moneycontrol.com
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