Due to a high disparity between interest rates for existing
and new customers, several home loan customers are unhappy with the high rates
they are being forced to pay. But when banks start discriminating between you
and its new customers, it’s time for you to transfer your home loan to a lower
interest rate and save money!
Step 1: Cost Benefit Analysis
Analyze your situation, after which you will be able to
decide the viability of transferring your home loan. Here are a few broad
guidelines that will help you:
If your home loan is
on a fixed interest rate, then you will have to pay a pre-payment penalty to
transfer your loan. In this situation it is not advisable to transfer your home
loan.
But if you have a high floating interest rate, then
transferring your loan to a lower interest rate will be beneficial.
If you have a home loan with long repayment tenure, then
transferring will benefit you, as a longer time-period implies higher benefit.
Step 2: Get NOC from Bank
NOC HOW TO TRANSFER Next step is to get an NOC (no objection
certificate) from your bank along with:
Foreclosure letter
Your payment history and
List of your documents that the bank has
This process may take 1 – 3 weeks, varying from bank to bank.
Step 4: Credit Approval
Loan approval
The bank will now evaluate your application and decide your
eligibility status. It may ask you a few more questions as well.
This is a time taking process as different banks have varying
requirements of documents. This process may take 3-4 weeks, varying from case
to case.
The bank will carry out extensive background checks on you
before they give you a credit approval.
Step 5: Documentation with Chosen Bank
Document verification IN the final stage, you will need to
complete the documentation process with the chosen bank. Both, your old and new
bank will have a specific requirement of set of documents to complete the
switching process.
A catch 22 situation arises in case of Home
Loan Transfer to the new bank as the old bank will release your documents
only if they get the cheque for the balance principal amount and the new bank
will release the cheque only after all the documents are submitted to them.
To solve this, a meeting is held between representatives the
two banks. A cheque of the balance principal amount is handed over to the old
bank, following the hand-over of your loan papers to the new bank. This ends
the transfer process of your home loan.
[Source: http://www.switchme.in/blog/2013/12/how-to-transfer-home-loan-switch-banks/]
