Switching Your Home Loan to Another Lender? Ask Yourself These Questions First

by MyMoney Mantra FinTech (Financial Technology)

Looking at the current falling interest rate regime, it can be aptly concluded that now is the best time to avail a Home Loan to purchase your dream house. Switching your Home Loan to another lender (if the existing one is not offering lowest interest rate in line with the prevailing market rates) can help you save a significant amount of interest cost.

However, there are so many things you need sort out before making the move. Ask yourself following important questions before switching your Home Loan to another lender through Home Loan Balance Transfer facility.

1. Did You Receive the Foreclosure Letter?

Foreclosure letter is a proof that the borrower has closed his loan with the current lender. Seeking this letter is important for smooth loan transfer process as the new lender may ask for the proof.

2. Have You Sought Consent of the Co-borrower?

If there is a co-borrower associated with your existing Home Loan, some lenders may seek his/her signature authorizing the loan closure. In case the co-borrower is not able to be present in-person at the time of closure, some lenders even seek a power of attorney from him/her. Hence, it is advised to be prepared and seek the consent of your co-borrower before switching your Home Loan.

3. Have You Received LOD from the Existing Lender?

Although MNC lenders issue LOD (list of documents) after loan disbursal, private lenders don’t issue it. Make sure you seek an LOD when switching the lender to ensure your documents are secure.

4. Have You Pre-planned the Loan Disbursal Date?

Talk to your new lender and fix the disbursement date to avoid paying double interest if you are traveling or when the old lender is creating issues in accepting the payment from your new lender in your physical absence. So, fix a date for loan foreclosure with the new lender in advance and inform your previous lender about the same.

5. Is There Any Pending Amount You Have to Pay?

Check if there are any charges pending to be paid. Go to the old lender with your cheque-book when closing the loan and clear all your pending dues before switching your Home Loan to the new lender.

6. In How Much Time Your Loan Will be Closed After Clearing Dues?

Just depositing the closure balance doesn’t mean your loan is closed with the previous lender. After clearing all your dues with the old lender, it may take about 8-9 days to complete the closure process. Be firm with your decision and ask the bank to close the loan at the earliest. Don’t forget to take regular follow up till the loan is closed completely.

7. Have You Received a ‘No Due Letter’?

Forgetting to get ‘No Due Letter’ from your existing lender may become hurdle after a few years when you will seek a loan again. It may happen that the lender forgets to update the loan closure and clearance information in credit bureau. ‘No Due Letter’ is a document that proves closure of loan with date and other details. In case you don’t receive this letter, at a later stage, going back to the old lender to update the change in the credit report will be a tiring process.

If the answer to all the questions mentioned above is “Yes”, you are ready to switch your Home Loan to another lender. We hope this information was useful to you.

Are you looking for attractive Home Loan Balance Transfer offers? Visit mymoneymantra.com, a leading online lending marketplace having more than 25 years of experience in providing financial services in India. Call our Mortgage Specialists toll-free at 1800 103 4004 for more information.