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What you should know while transferring your home loan

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What you should know while transferring your home loan

Are you getting your home transferred to another lender? There are some things that you should certainly know about in this regard. Firstly, you should always keep an eye on the prepayment charges that have been imposed by your present lender on the foreclosure for your loan. This is something that you should not neglect.

You may chance upon a bank that is offering a home loan with a comparatively lower rate of interest as compared to your present lender. You may think of transferring the home loan from your present bank to another lender in this scenario. This will help you get the benefits of a lower interest rate which automatically translates into a lower outgo in terms of interest costs. However, you should always check the prepayment charge figures. This may vary between 2-3% of the outstanding loan amount. Suppose you have Rs.10 lakh as an outstanding loan amount and hence the pre-payment charge will be around Rs.20-30,000. This has to be factored into the total cost of the transfer.

Watch out for the processing fees that other banks usually impose in case of loan transfers. Processing fees usually vary between 0.5-1% of the total loan amount. In case the loan amount is Rs.10 lakh then the processing fees are expected to be around Rs.5 -10,000.  Do the math before deciding whether you should opt for a home loan transfer or not. In case you are saving a major amount after deducting the processing fees and prepayment charges, then you should definitely go for it.

 

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