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A home loan signifies a long payment of loan EMIs to the bank which often varies over a time span of long 20 years. Every month an amount along with its interest goes to the instalment payment for the home loan borrowed. In such cases care must be taken to use a bank that offers interest rate at the lower side. In certain situations it happens that at the time of taking the home loan the borrowed used a particular bank. But later found another bank offering a lower rate of interest. In such cases, he opts for transferring the entire amount of unpaid principal to the new bank. However, the process involves certain steps as described below:
Transfer Process of home loan to a new bank from an old bank
The process of transferring a home loan can be done in the following small steps
- First of all an individual is required to submit an application requesting the present home loan bank that he or she is intending to transfer it to a new bank. This request after reviewing will be approved by the bank and a consent letter along with a NOC or a No Objection Certificate will be provided to you. This NOC will show the balance to be paid.
- The next step is to submit all these documents to the new bank where you wish to continue.
- Now, the new bank will sanction the amount of loan to the old bank thereby closing the account.
- After successful completion of all the steps of the transaction all the papers related to the property is handed over to the new bank. The post dated cheques which you gave to the old bank will be successfully cancelled and the ECS instructions will also be cancelled.
- The bank where you will be now paying your remaining outstanding loan amount will treat this as a new project. Hence, all the procedures related to home loan will once again be repeated in the new bank. Over here all data related to appraisal of credit, verifying the property legally and evaluating new bank etc activities will be performed.
Details of charges for transfer of loan
When a home loan account is transferred from one bank to another a processing fee is charged. The new lender that is the new bank will require a processing fee which varies in between 0.5% to 1.5% of the total loan amount.
Things to take care of while transferring a home loan
- Checking of the time when the loan switching is happening is crucial. It is advisable to switch a home loan during the initial years of loan payment.
- Studying processing fee and charges related to such transfer must be done beforehand. Or else one will end up losing a lot of money just paying fees.
- Understand and read all the terms related to a home loan transfer.
- Also, do not forget to take all the necessary documents in time.