Is this the right time to transfer your Home Loan?

With the huge amounts of funds deposited into banks during demonetization in India, banks have reduced their home loan interest rates a great deal. A number of banks have reduced their housing loan interest rates by 50 basis points making their current rate is 8.5 per cent. Following SBI other banks and NBFCs too have reduced their rates, one whom has reduced its housing loan interest rates by 45 basis points. These rate cuts will mainly benefit new borrowers. But this doesn’t mean that existing borrowers cannot benefit from these reduced rates at all.

If you currently have a home loan and are thinking of transferring, you loan due to lower interest rates at another provider this just might be the right time to do so. Here are some factors you can consider that would help you decide whether you should opt for a home loan balance transfer now:

1.      Savings is the main reason for transferring home loans. But make sure that you opt for a home loan balance transfer only if the total savings in interest payout is substantially higher than the cost incurred while transferring the loan. Usually, the new lender will charge various fees, such as conversion fee, processing fees and administrative charges during the loan transfer.

2.      Transferring your home loan to a new lender is similar to availing a fresh loan, where the new lender will have its own set of terms and conditions. You can use it to re-set your loan EMI and tenure and top up as well. Opt for a home loan transfer if your existing lender is not allowing you to reset the terms and conditions of your loan.

3.      Usually banks and NBFCs provide top up loans to existing borrowers. These are just like personal loans but their interest rates are lower than a separate personal loan. One may require a top up in case of funds required for an emergency or in case of a home loan for renovations. Transfer your loan only if your current provider is not allowing you a top or if the new provider is offering you a better rate.

Transferring home loan to a new lender helps one to reap benefits of a fresh loan in itself. Having a better rate of interest is beneficial in the long run and if need be one can always opt in for better rate provided by banks, NBFCs or other financing institutions. Click here to know more about home loan interest rates.

Why Home Loan Application get Rejected

While preparing your home loan application you think about everything. You do your research; you check your credit score, the documents required for home loan. But do you think about why, despite doing all the necessary things, your loan application might still get rejected?

With the disposable income of the working class increasing day by day and property providing a great investment opportunity, the number of people applying for home loans is ever increasing. The A lot of times, despite being in a good credit space, having a good stable monthly income and doing everything else right, your home loan application may still get rejected. 

Here are a few uncommon reasons why that might happen:

1.    Builders today, have tie ups with banks. If the builder you’re seeking a property from, is not in a tie up with your bank or isn’t approved by your bank, your loan may get rejected. It’s a good idea to check with your builder about which banks he has got approvals from.

2.    A builder may figure in a bank's list of approved builders, but a specific project launched by him may not have been approved by the concerned bank. In addition, there are likely to be cases where particular phases of a project may not have bank approval. So before applying for your home loan it’s extremely important to check with your builder about all these approvals.

3.    In the case of resale property, if the buyer and seller mutually decide on a price for a property and the buyer seeks a loan, the bank or loan provider re-evaluate the price of the property and if the value is lower than the price decided by the buyer and seller, the loan stands a chance to be rejected.

4.   Defaulters are blacklisted along with their properties by banks and housing finance providers. If you happen to live in a house that has been blacklisted your application may be rejected.

5.      Your job stability is extremely important when you apply for a loan. Some banks even insist that you need to be employed with a concern for at least three years to be eligible for a loan.