The home loan balance transfer is transferring the home loan balance from one lender to another. The home loans balance transfer helps reduce the burden of excessive interest charged by a particular lender to transferring the loans to another lender. To transfer the loans to another lender, the borrower should have a proper credit score and be the honest credit payer for the loans. The loans transfer to another lender with lower interest rates is beneficial only if the loan amount to be repaid to the bank is more than 50% of the total value of loans and the principal and the interest. The bank may sometimes reject the balance transfer request if the borrower is not amongst the honest payer of credit or else has a poor credit score. The borrower should be careful while transferring the loans to another lender as some misleading clauses have been added in the home loans agreement, which may not be suitable or beneficial to the borrower. Thus the applicant should read the terms and conditions properly before the transfer of the loans.
The newer lender may charge the processing fees separately for the processing of the loans. Also, the borrower should check if the borrower is levying any hidden charges in case of loans. The loans can be availed for a higher or else shorter duration while switching over the lender. Approval of the lender is necessary for changing the tenure of the loans. Thus, changing the tenure can help the borrower become early debt-free by reducing the tenure or paying lesser monthly installments in case of increasing the tenure. The loans transfer helps reduce the burden of the interest repayment of the loans. The interest rates in India are on a continuous decline; thus, the transfer of the loan can be beneficial if the loans are availed at a fixed interest rate instead of the flexible interest rates. The competition amongst the lenders is fiercely competitive; thus, the borrower has multiple choices in case of the loans to avail. The NBFC’s are also a better choice for lending or transfer of loans which may provide loans to the borrowers at attractive interest rates and provide better service to the customers.
Following are the hurdles in the case of the home loans balance transfer:
- Tedious process:
The loan balance transfer process is tedious as the lender has to evaluate the pending amount and then evaluate the interest levied on the new loans. The loans may also have scrutiny, which can be a time-consuming process to sort out. Thus understanding things better is necessary about the home loans transfer, whether it is beneficial or not.
- Risk for the lender:
The existing lender may create hurdles in the transfer of the loan as the existing lender may not wish to lose the business. There could be a delay in getting the no-objection certificate from the existing lender.
- Consent of the co-borrower be required:
Consent may be required from the co-owner for the transfer of loans. The new lender may consider the CIBIL score, age, history of the previous loans before processing the loans. Both the borrower and the co-owner for the transfer of loans.
- Terms & Conditions may be misleading from the new lender:
The lower interest rates may seem attractive to the lender, but the terms & conditions may be misleading for the borrower. The loans agreement may have misleading clauses, and thus there could be hidden charges being levied by the lender.
- Problems created by the previous lender:
The previous lender may create hurdles to retain the business like providing misappropriate information to another lender, may go slow with the relieving and providing the No-objection certificate to the borrower. Also, the lender may provide false information about the borrower’s payment history, thus rejecting the transfer of the loan from another lender. Thus in some discrepancies, the misconduct can be challenged in the consumer forum department.
Thus the borrower should remain careful while transferring the loans. The borrower may be mis-leaded by the new lender, or the existing lender may not provide NOC to retain the client forcibly. Also, the exact benefit from the loan transfer should be evaluated before the transfer to a new lender. And the terms & conditions should be thoroughly be read by the borrower before proceeding with the transfer application to check with the hidden charges.