If you feel that you are paying a high interest rate on your home loan and want it to reduce, you can switch to a bank which offers you so. More and more lenders are offering lower interest rates than usual which makes transferring home loans a lucrative opportunity to save money. It is a good option to save money on EMI.
Transferring a Home Loan from one Bank to Another is a simple process that can be completed in 5 steps and takes only 10 weeks. The 5 steps to complete a home loan switch to a new bank are:
- Reason for home loan transfer: Before initiating the home loan process you need to identify the reason for doing so. Is it because of the high interest rate, the bad service or the bank not agreeing to your terms for loan payment? For example, a person might want to reduce the interest rate at which he or she initially started paying the EMI by increasing the loan tenure but the bank might not agree to do so. It will approximately take you a week to identify the bank to which you want to transfer your home loan to. Carefully study the selected bank’s terms and conditions.
- Obtaining the relevant documents for the transfer: You have to obtain a No Objection Certificate or NOC from the bank you are transferring from. Along with this you will also require a foreclosure letter, a payment history or an account statement and any other documents that your future bank might ask from you. The process of obtaining relevant documents for the transfer might take up to 3 weeks as the bank might not present you the desired offer at once.
- Application for a loan from the new bank: After acquiring the relevant documents, you can now apply for a loan but you have to first obtain an NOC or No Objection Certificate from your builder or the society in which you live. These documents along with your income documents and account statements will then be observed and studied carefully by your future bank. In your application for a loan, you can apply for the type of change of terms you want in your home loan.
- Approval of credit: In this step, all the documents will be verified by your future bank. This process is tedious and varies from application to application. The bank will check whether you are eligible for a loan or not by recalculating your loan amount, verifying your documents and checking your credit score. The process will take about 3-4 weeks.
- The decision: After all the above steps are completed, your new bank will provide you a letter in which it will mention the rate of interest at which it will provide you the loan, the tenure as well as other terms and conditions. You can either accept these terms and switch your home loan or you can continue to stick with your old bank.
Before switching the home loan, you should carefully study whether you are going to truly benefit from the process or not. If yes, only then should you make the switch.