Paying High Interest on Home Loan? Try Balance Transfer!

Loan facility provided by Banks and NBFCs has made the dreams of a lot of people to own a place of their own come true. However, not everyone’s dream come at the same price! Lenders employ a lot of norms and standards to verify Home Loan applications to ensure that the borrowers don’t default in the future. Depending upon various criteria, the interest rates are determined and it varies between the applicants. Some may have to pay higher rates and some lower interests. In today’s article, we’ll discuss how it is possible to reduce your interest rates as you start your repayment with Home Loan Balance Transfer. 

How is Home Loan approved?

Before approval of any loan, Banks and Housing Companies look into various factors of the applicant for evaluation and determine the risk factors associated. Here are some of the factors that are considered while reviewing your application.

1. Documentation – The important step the lender looks into while approving a Home Loan is the submitted documents by the applicant. They vary according to the size of the loan and purpose i.e KYC Documents, Income and employment details, Credit Score Check, etc.
2. Borrowers’ Age and Marital Status – All loans are provided to people above 21 years of age and their marital status is an important aspect when reviewing the application. If married, it is advised to apply jointly to the loan which will minimize the risk to the banks. 
3. Your Salary – The applicant’s take-home salary plays a key role in determining the value of the amount that can be lent to an applicant to ensure you can pay off the loan within agree tenure. 
4. Existing Debts and EMIs – Your existing liabilities and their tenure is a key financial parameters in determining the applicant’s repayment ability. The more debt you have and the more the existing EMIs, the chances of sanction will reduce drastically.
5. Credit Utilisation – This factor determines how much of the credit you are currently utilizing in our credit limit. The lesser credit you utilize, the higher the chances of Loan approval.

Taking into account all the laid out Standards and industry norms, the managers of NBFCs or Banks take a final call to approve. While most Home Loan applicants have higher chances of approval, the interest rates vary between them. Banks determine the risk factors that can hamper repayments in the future. So, in order to compensate for the risk factors, Banks levy higher interests on the risky applications and lower interests on those with fewer factors of risk. 

How much can be saved on a Home loan Balance Transfer?

Home Loans in Bangalore undergo severe scrutiny before approval. Because of the volume of applicants, the lender makes intense background checks and determines the rates depending upon the risk factors. While Banks offer loans as cheap as 7.5%, they may go upto 10% interest rates. While the short loans may not have a big impact on the value of money repaid, in the long run, they’ll take out a big chunk of your income. 

Lenders levy interest on multiple models and the most preferred is MCLR rates. The Marginal Cost of Lending Rate (MCLR) adjusts to the changing markets. When interest rates are hiked, your EMIs will spike. The borrower needs to keep in check their EMI dues every month. 

If you have already availed a home loan at higher interest rates, you can reduce your interests and also increase tenure (if required) by switching your lender. This process of changing your loan from one lender to another is called Home Loan Balance Transfer. 

How do I change my lender?

Here’s the step-by-step process to transfer your loan. Alternatively, if you find the process tedious, you can hire Home Loan Agents in Bangalore who can help you port your home loan. 

1. Check around the interest rates by other lenders in the market.
2. If possible, negotiate with the existing lender for reducing the interest rate.
3. Get a NOC for Balance Transfer from the existing lender and key documents as well.
4. Submit the documents to the selected lender or Money Mango who can easily transfer your Loan to another lender.
5. Once the home loan transfer is approved, repay the existing lender.
6. Start your repayment to the new lender at lower interest.

Is it beneficial to transfer Home Loan?

1. Reduced Home Loan interest.
2. Part Prepayment option.
3. Increase tenure or reduce EMIs.
4. Top-up loan facility.

Conclusion

A Home Loan Bank Transfer is a good opportunity for the borrower to reduce their liability. Borrowers need to make an informed choice while availing the facility. Do not fall into the traps of short terms offers promoted by the lenders. Hire experienced Home Loan DSA Money Mango for smooth and reliable facilitation of transfer.