Things that a Borrower Should Keep in Mind Before Refinancing their Home Loan to a New Lender!

Today, buying a house without some kind of financial assistance is quite challenging. What most borrowers do is apply for home loans to get the required funds for the property purchase. Now, lenders offer various home loan plans with differing terms. If you have taken a plan a few years back, it is possible to find new loan plans that are much better than your existing loan. But this does not mean that you have to miss out on a good deal. Borrowers have the option to go for a home loan balance transfer, which involves transferring their current home loan debt from one lender to another.

Now, refinancing your home loan can be a great move, provided you have carefully thought about it. A few things need to be planned before you go ahead and apply for a home loan balance transfer.

So, make sure to go through the following pointers before transferring your home loan to a new lender:

  • Inquire about your eligibility

Before sending across your home loan refinance application, it is very important to first check with the new lender about their eligibility criteria for a home loan balance transfer. This way, you will know beforehand about the new terms that can be offered based on your eligibility criteria.

  • Check your CIBIL score

New lenders check borrowers’ CIBIL records before approving their balance transfer applications. If you do not have a good record, the new lender might not offer favourable terms. Ideally, one should always maintain a credit score of 750 or more. With a good credit record, you are more likely to get better terms such as a lower interest rate, better repayment tenure, and even a top-up loan!

  • Learn about the exact charges involved in the transfer

Many borrowers only focus on the home loan balance transfer interest rate while thinking about transferring their home loans. However, this is not the only thing that needs to be focused on. It is also very important to make sure that you are aware of the additional charges involved in the transfer. These charges could include processing fees, administration fees, application fees, etc.

  • Look at the remaining tenure of the existing loan

This is one of the most important factors that need to be considered before refinancing your home loan. If you have already paid off a large chunk of EMIs and almost completed the repayment tenure, transferring the loan might not be very useful. To take advantage of the revised terms, it is better to transfer the home loan when a majority of the tenure is left to be repaid.

Carefully planning a home loan transfer can prove to be very beneficial. You can make the home loan repayment much easier along with saving money on the loan too. Also, it is better to make use of a home loan balance transfer EMI calculator before applying for the transfer. Using this home loan calculator will help in displaying the new EMIs based on the revised terms of the new lender.