What Mistakes Should You Avoid While Planning to Transfer Your Housing Loan to a New Lender?
Many borrowers opt for a home loan balance transfer in search of better deals on their loans. Now, while this can be a great decision and can help save a significant amount of money, it is also important to take the right steps. Making mistakes can cause problems in the repayment of the loan, and this is something that can affect your credit score.
So, to make sure that does not happen, let us take a look at some of the most common mistakes borrowers make while applying for a home loan balance transfer.
- Skipping past the processing fees and additional charges
While looking at the revised terms of the new lender, borrowers sometimes skip past the charges that they would incur by choosing to transfer the home loan. It is necessary for you to calculate any additional charges such as the processing fees or administration charges that lenders levy to understand the actual amount that is being saved by opting for the transfer.
- Not learning more about the credentials of the lender
While searching for home loan refinance options, borrowers consider numerous loan plans and the benefits that they provide. However, not giving importance to the lender’s reputation could be a mistake. It is advisable to rely on a known lender that is reputed. You can read reviews about their loan plans as well as services before making a decision on whether to transfer the loan to them or look for a different lender.
- Transferring the loan even though the existing tenure is reaching its end
Just because there is a lender offering a low interest rate does not necessarily mean that it is always beneficial. If the current home loan’s tenure is almost completed, it might not be the best option to go for a home loan transfer. This is because there are only a few EMIs left to be paid, which means the revised rate might not save you a significant amount of money. It is better to transfer the loan if the repayment tenure has just started and most of the monthly instalments are left to be paid off.
- Not using a home loan balance transfer EMI calculator beforehand
The main goal of opting for a home loan balance transfer is to make the repayment of the loan easier. Now, the new lender is most probably going to offer a lower interest rate. Make use of the home loan balance transfer EMI calculator to learn about the new monthly instalments that you would pay after the new interest rate is applied. This will help you learn whether the revised interest rate that the new lender has offered is an affordable option or not.
Now that you are aware of these mistakes, make sure to avoid them while opting for a home loan balance transfer. It is also beneficial to first ask the lender about the documents required for home loan balance transfer as each one may have different requirements.
