Housing Loan is like an inevitable need in the modern world; with property rates high enough to shatter the dream of a lower-income family of possessing a home-sweet-home. You need lakhs of rupees to buy a place for yourself where you feel at home. A house on rent can never give you that sense of belongingness which a house of your own has. You may get it constructed or buy an already built up house, one thing remains same – the repayment of Housing Loan.
With the market taking a roller coaster ride, the loans also get fluctuated. The rate of interest is unstable; sometimes it is an all-time low and sometimes the interest rate rise to hit the rocket flying in the space – an exaggeration? The people re-paying a Housing Loan would understand what it means.
Fluctuating rate of interest is a blessing as well as a curse, sometimes you get benefits from it, sometimes it even costs you a few thousand extra bucks. Not everyone finds it comfortable to go with the fluctuating rates, there are people who want stability and thus opt for a fixed amount to be returned every month, and they apply for a Home Loan with a fixed rate of interest.
It sounds like a brilliant idea to pay a fixed amount every month for a number of years, but actually, it is not. This way you, in fact, pay off a huge amount as interest, even when the market norms have reduced the rate of interest to a lower amount. What can we do in such a situation when we find that the rate of interest charged by another bank is lower than what you are currently paying?
An attractive scheme does make you reconsider refinancing of your Home Loan. There is a number of options available to pick from and ease out your worry of paying a high rate of interest.
Sometimes when we need the money urgently, we do not consider the rate of interest since we can’t lose the deal and take up a loan in a hurry, but that doesn’t mean that you have to bear with it forever. A person who didn’t have a good credit score or whose Application for a Home Loan was rejected previously may also happily take a sum with a higher rate of interest. Even those who take the home loan for the first time, and do not know much about it, take it at any rate available. But later on when you find that the rate of interest is too high, there is no need of repenting; the option for refinancing the housing loan is still available.
The various steps that you need to take in order to Apply for a Home Loan Balance Transfer or refinancing your Home Loan are mentioned below:
- Check the eligibility criteria
The first and foremost thing to do is – check if you fit well with all the terms that the financing company or bank lays down for its borrowers. A background check including the details of how many EMIs (Equated Monthly Instalments) you have already paid, did you make the payments on time or not, is the property occupied or still under construction and such things are what the bank looks into when you approach it for refinancing your Home Loan.
- Documentation
When you applied for a housing loan, the verification of documents was made, but when switching your bank, you need to show the following documents to the bank you are transferring the loan to, again.
- No Objection letter from your current bank
- The repayment history
- All the documents that were in your bank’s custody
- Proof of address, age and a photo for KYC
- Proof of income
- The credit history
Just like when you applied for the housing loan initially, a processing fee was charged, the same is chargeable when moving from one lender to another. Don’t forget to evaluate the total benefits offered and the expenses to be paid for transferring the loan before choosing a new lender.
Once the application is approved, a cheque of outstanding amount is given to the new lender in order to foreclose the loan. After the payment is received, the original documents will also get transferred from the existing institution to the institution you opted for the refinancing purpose. Refinancing can prove to be the best decision when you are being charged too much as interest.
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