For those who are unaware of what a home loan balance transfer is, it is the process of transferring a borrower’s home loan from one lender to another. Now, the most common reason for transferring a home loan is to get a lower home loan interest rate. However, borrowers could also opt to refinance their home loans in order to get a home loan top-up, extended repayment tenure, or even better service in general.
While a home loan balance transfer can indeed make life easier for a borrower, it is also very important to be aware of the obstacles that borrowers could face while transferring their home loans. Not knowing these obstacles could unnecessarily create complications that would make the entire process tedious.
To avoid any problems regarding the home loan balance transfer, take a look at 5 obstacles that one should keep in mind while refinancing their home loan:
- A processing fee could be involved
Lenders consider the borrower transferring their home loan as a new customer, which is why a processing fee could be charged during this procedure. This increases the borrower’s cost of transferring the loan, so make sure to consider this expense to understand the exact amount that is getting saved after the home loan balance transfer.
- The deal might be a risk for the new lender
If the new lender feels like the loan transfer does nothing but put them at an increased risk, they could reject the transfer application. So, make sure to keep a clean repayment and steady employment record to ensure that the lender’s risk is minimised before opting for a home loan balance transfer.
- Transferring the home loan might be a tedious process
Any borrower that transfers their home loan would be required to submit a list of documents to the new lender. After the documents are submitted, the new lender will evaluate them before accepting the borrower’s application. To ensure that there are no problems, it is advisable to check with the lender regarding the documents required for a home loan balance transfer.
- The previous lender could create complications
When an existing lender might be losing one of their existing customers, they could create complications. For instance, the lender might cause a delay in providing the borrower with a ‘No Objection Certificate’ (NOC). An NOC is a mandatory document that the borrower would need for the loan transfer to go through from one lender to another. So, make sure to obtain this document to submit to the new lender.
- Co-borrower’s consent might be required for the transfer to go through
If there is a co-borrower involved in the home loan, make sure to check with the new lender regarding the need for the co-borrower’s approval for the transfer. There are lenders who require the co-borrower to be present for the formalities of the transfer. So, it is better to be clear about the lender’s terms before going ahead with the process.
Since financial institutions are always updating their home loan plans, it is quite natural for borrowers to find new lenders offering better deals, such as a lower housing loan interest rate. However, before opting for a home loan balance transfer, make sure to consider the above-mentioned obstacles for ensuring a smooth process.