It is possible that a lender somewhere offers a lower interest rate than your current lender. Perhaps, you agreed to the current lender’s offer without researching other lenders. Paying high equated monthly instalments (EMIs) on a home loan means that there’s hardly anything left for savings or other living expenses.
A balance transfer of your home loan is an ideal move as it guarantees you a change of lender, especially in the area of interest rate. Some lenders have poor customer service and a website that’s difficult for customers to navigate. Opting for a new lender means that you will not only pay low EMIs but also enjoy an improved service delivery.
Before initiating the process of a home loan balance transfer, we advise that you consider some points. With these points in mind, you should encounter no problems with the balance transfer. Read on to learn more.
Six Points to Note Before Opting for a Home Loan Balance Transfer
Below are six valuable points that you should note before choosing a home loan balance transfer:
Interest on Your Home Loan
Lenders charge you for taking a home loan based on several factors. Factors, such as age, credit score, etc., determine what you will pay as interest. However, if you have an impressive credit score and are young, you should not be charged a high-interest rate. But if that isn’t the case, transferring your home loan to a new lender is justified. Before commencing the process, ensure that you compare the interest rate with other lenders’ interest rates.
New Lender’s Interest Rate
What amount will the new lender charge you as interest? To know this, you must conduct a comprehensive fact-check to avoid making a costly mistake. Ensure that you aren’t enticed by a seemingly low-interest rate only to face a higher one upon completion of the balance transfer process.
Consider the Balance Transfer Costs
Do your homework and know the value of fees like foreclosure charges, administrative, inspection, application, and processing fees. Determining the exact amount needed to cover these expenses enables you to make an informed decision.
Check Your Credit Rating
Your credit score and history are valuable aspects of the balance transfer process because they determine whether or not you can negotiate fairer terms and conditions. Having a great credit score gives you the chance to discuss a reduced interest rate with the new lender. To improve your credit score, we ask that you pay your existing debts.
Validate the Lender’s Terms and Conditions
Your lender, whether a bank or non-banking financial company (NBFC), operates with a set of terms and conditions that you must read and understand before making any serious decision.
These terms and conditions contain information about their lending policies, including their ability to repossess your property if you default on the EMI payment. Gain full knowledge about your prospective lender’s terms and conditions before deciding to take a loan from them.
Negotiate a Lower Interest Rate with Your Current Lender
In point three, we recommended that you consider the various fees associated with the home loan balance transfer process. Though the new lender may possess incredible terms, it will cost you a lot to transfer your home loan. Ensure that you have done everything within your capacity to make your current lender consider lowering the interest charged on your loan.
One way to do this is to negotiate with the current lender for a lower interest. If the negotiation succeeds, you are saved from the stress of paying numerous fees to effect the transfer. Having a good credit score and a healthy debt repayment record boosts your chances of being strongly considered.
Final Thoughts
It’s possible to transfer your home loan to a new lender to enjoy several benefits, such as a lower interest rate, a sizable top-up loan amount, and excellent customer service. Provided that you follow the appropriate steps, it should be a successful procedure.
Remember that you can get your current lender to consider lowering the current interest rate. If that doesn’t work out, kindly opt for a new lender whose terms and conditions you have studied closely and can cope with.
