Transferring home loan from one lender to another

If a person is not okay with his/her home loan for any reason, he/she always has the option to switch lenders. Many a times, a borrower is offered a low rate of interest that impacts the EMIs to a greater extent. Hence, it makes sense to transfer loan account. The process to transfer home loans is not very complex but one needs to be careful to avoid any hiccups or problems.

1) Penalty for transferring loan needs to be checked with the lender. Lenders and banks often charge some amount as penalty on closure or transfer of home loans.
2) Then, if the borrower is okay with the charges and finds transfer beneficial, should request for the same.
3) A no objection certificate is to be obtained from the current lender. Apart from this, a foreclosure letter has to be requested. Also any documents which were submitted to the bank have to be taken back. A person can also ask the lender for a payment records to show the new loan provider payment history.
4) A NOC has to be requested from the developer as well, to prove that the person actually owns the property.
5) Now, these documents form part of an application to the new lender where the property owner wants to shift the home loan into. The lender will go through all the documents and do a verification of the credit history and worthiness of the borrower.
6) Finally, the terms will be negotiated and new mortgage will come into effect. The loan of the old lender is paid off by the new lender. But the new lender will consider this new mortgage as a fresh mortgage.

Things to keep in mind while switching to new loan account

1) The borrower also has the option to negotiate a loan on better terms with the current lender.
2) It is always advisable to negotiate and finalize a new lender before closing account with the present lender or bank.
3) All original documents that were submitted to the first lender would also need to be submitted the other lender.
4) Low interests should not be sole rationale to switch or transfer loans. A borrower should also take into account other costs like penalties levied by original lender.
5) It is always suggested to shift loans in early tenure of the mortgage.
6) The borrower should always maintain good credit history for a favorable transfer of loan.

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