As a home loan provides you with the ease to meet your dream of owning a home early in life, it may be termed as one of the highly demanded credit options. It is a long-term commitment loan that usually spans up to 20 years due to the involvement of a huge amount. As the loan spans for over a decade, there are high chances for you to come across home loan lenders offering lower interest rates than your existing lender. By opting for a home loan balance transfer option, you can easily switch your existing home loan to another lender.
What is a home loan balance transfer option?
Home loan refinance is a facility through which your new lender pays your ongoing home loan and you become liable to meet the home loan outstanding repayments with the new lender. Usually, this option can be availed to gain the benefit of lower home loan balance transfer interest rate, which automatically lowers your loan EMI and overall interest outgo. This reduces your overall loan burden.
To be eligible for a home loan transfer, you must initially keep handy all the necessary documents for home loan transfer. Documents required for home loan balance transfer include consent letter, NOC (no objection certificate), foreclosure letter, loan agreement, home loan statement, property documents, postdated cheques, important KYC documents and financial documents. Next, you must factor in certain eligibility parameters to understand your home loan transfer approval chances. These are:
- Age
To be eligible for the transfer, you must be between 21 and 60 years of age. Having a higher age over 60 years may reduce your chances of availing the transfer due to lack of income and increased vulnerability to declining health. In such a case, you can boost your transfer chances by adding in a co-applicant having a high credit score and stable income. Applying for the transfer option jointly enhances your chances of approval because this lowers the lender’s credit risk massively.
- Income
Income is not just one of the home loan eligibility parameters but also a vital parameter considered by home loan balance transfer lenders. Ensure to keep handy your income documents. Avoid frequent job switches if you are looking to avail the balance transfer facility in the future. This is because frequent job switches discourage balance transfer lenders from lending you as it creates the impression of job instability, which lowers your reliability for them.
- Credit score
Credit score is one of the important factors considered by the balance transfer lenders. This is because, credit score helps them to understand your credibility and behavior with credit. In case, your credit score is 750 and above, you may hold higher chances to avail the transfer option at lower home loan balance transfer interest rate.
Ending note
In case you are overburdened due to high home loan EMI, then you can avail the home loan balance transfer option. This option allows you to avail lower home loan interest rate and higher top up loan facility. You can use the home loan top up availed through the transfer option to meet your personal monetary mismatches. Note that before availing the balance transfer option, you must ensure to use the home loan balance transfer EMI calculator. This calculator allows you to understand your overall savings on interest component through the transfer option. In case of substantial savings, opt for the balance transfer option.
