Mortgage loan balance transfer is a feature using which one can transfer the balance loan amount to a new lender for more competitive loan terms and interest rates. You can even refinance your ongoing loan against property if you need additional funds as this option gives you the option to apply for a top-up loan along with lower loan against property interest rates. While it is considered that the balance transfer facility is extremely beneficial, borrowers must evaluate the costs involved and see if the move makes sense for them. Here are 5 key things to remember if you are planning for a mortgage loan balance transfer.
Things to Remember While Opting for Balance Transfer of Mortgage Loans
- 1. Compare Lenders – The loan against property balance transfer facility gives you the opportunity to transfer your mortgage loan to a new lender offering you a lower rate of interest and better lending terms. However, this can be achieved only once you find a lender who is willing to give you an interest rate that is lower than you what you are paying for your current mortgage loan. So, it is advisable to compare interest rates available from various lenders before going in for a mortgage loan balance transfer.
- 2. Your Current Lender’s Stance on the Balance Transfer – Previously the lending institutions were not bothered after giving loans to a customer, but today, banks want to retain their existing customers by offering added benefits apart from lower interest rates, top-up loans, and longer tenor loans. They also offer a host of other facilities when they see customers go. If you decide to move out and go for a mortgage loan balance transfer, you should also account for the expenses that you will now incur if you do a balance transfer. These expenses usually add up to a considerable sum of money. So, if your current lender tries to retain you by offering you better loan terms and conditions, you should consider staying with your current lender and saving the costs associated.
Know Your Loan Repayment Status – Balance transfer of a loan will benefit you only if you still have a sizeable portion of your loan still waiting to be repaid. It means that if you are more than halfway through your repayment tenor, or even more, it makes little sense to transfer the balance amount to a new lender as the cost of transferring the loan may outweigh the remaining amount. So, it is best to calculate the costs of a balance transfer before looking for a lender for a balance transfer.
Check Your Credit Rating – Your CIBIL score or credit rating decides whether you are eligible for a balance transfer or not. If you have not been consistent in repaying old debts and EMIs on time, it will reflect poorly on your credit score. A poor credit score reduces your eligibility for a mortgage loan balance transfer facility since the new lender will consider your credit score along with other factors. The new lender will assess your repayment capacity, credit profile and EMI repayment record afresh before they approve your application for a balance transfer.
Cost of Transfer – Your current bank may apply a penalty charge clause in case of the balance transfer. So, if you are transferring the loan make sure that the penalty is worth the lower mortgage loan interest rate and other benefits that you may get from transferring the loan. The purpose of transferring the loan balance to a new lender is to achieve lower interest rates and better service. If the cost of transferring said loan exceeds the interest saved, the purpose stands defeated.
Loan Against Property Eligibility
To apply for a loan against property, the following eligibility criteria need to be matched:
- The salaried applicant’s age must be between 23 years and 62** years and a self-employed applicant’s age should be between 25 years and 70** years
- The applicant must be an Indian resident.
- Job experience of 3 years in private/public sector firm (for salaried borrowers) and more than 5 years of business experience (for self-employed borrowers) needs to be shown with a steady income
** The maximum age must be the age at the time of loan maturity.
How to Apply for Loan Against Property
Follow the given steps to apply for a loan against property.
Check Your Eligible Loan Amount
After researching, use a loan against property calculator to figure out the loan amount you are eligible for and whether this loan amount will be enough for you.
Check the Eligibility Criteria
Your loan application is approved once you meet the eligibility criteria. Your personal details, income, and financial details along with the legal papers of the property also help to decide your eligibility.
Use Online Calculators
A mortgage loan emi calculator can help you know in advance your Loan Against Property EMI payments based on the information provided by you. Use the calculator to understand what you can afford to pay each month.
Fill the Form
Filing the loan application form online does not require you to visit any branch office. Enter the required details. Once your application and documents are verified, you can expect the loan sum to be disbursed into your account within 72 hours*.
Summing Up
A mortgage loan transfer is a great way to bring down the interest outgo on your existing loan. But is it the best decision? Sometimes the time and energy spent to get the balance transfer done may outweigh the interest thus saved. So, think carefully before going for a mortgage loan balance transfer.
