There are a lot of borrowers who choose to opt for a home loan balance transfer in order to get better terms for their home loans. Refinancing a home loan can be very beneficial as this move can help the borrower save a significant amount of money. However, before transferring their home loan, a borrower needs to consider certain factors. There are cases where borrowers have taken a hasty decision with transferring their home loans to new lenders without planning properly, and this can create unnecessary complications.
So, to help avoid any such problems, take a look at some of the most common mistakes that borrowers make while opting for a home loan balance transfer:
- Not considering the new lender’s credentials
While applying for a home loan, a lot of borrowers simply focus on the terms and conditions included in the loan plan. However, it is also very important to focus on the financial institution’s credentials along with the loan terms. It is quite possible that the reason a borrower is looking to transfer their home loan is that they are dissatisfied with the current lender’s services. So, it is advisable to first evaluate the new lender’s credentials before transferring a home loan.
- Not making use of a home loan balance transfer EMI calculator
There are many reasons that borrowers can have for wanting to transfer their home loans to new financial institutions. However, the most common one is to get lower home loan interest rates. Now, it is always necessary to be aware of the EMI payments before accepting a loan. This is why it is a mistake to not use a home loan balance transfer EMI calculator before refinancing a home loan. This calculator will help in understanding the EMI payments based on the new lender’s terms. The borrower can then decide whether moving the home loan balance transfer would be a good option.
- Not focusing on additional charges such as the processing fees
Quite often, borrowers simply focus on the beneficial terms of the new lenders while deciding to transfer their loans. While the lower interest rate can indeed bring down their EMI burden and save money on the overall cost of the loan, it is also important to consider the charges involved in the home loan transfer. For instance, it is common for lenders to place a processing fee on a home loan balance transfer, so consider such charges while calculating the amount that would end up getting saved after the transfer.
- Transferring the loan when the current repayment tenure has almost come to an end
If a borrower has already repaid most of their home loan EMIs, transferring the home loan at such a time might actually result in them losing money. This is because they might incur charges which exceed the potential savings. It is better to transfer the home loan when most of the current EMIs are left to be paid so that the new lender’s terms can apply for a large part of the loan repayment tenure.
Lastly, do not forget to check with the new lender regarding the documents required for home loan balance transfer. Not being aware of these requirements can create complications in transferring the home loan from one lender to another.