Sunday, 5 August 2018

Think, understand and then do the loan switches over

Think, understand and then do the loan switches over

Switching home loan is a better option for such people, who have to pay higher interest rates than this. However, the most important question related to this is that the difference between these two interest rates is that the customer decides to switch home loan. But before going to the bottom of this question, we tell the customers the benefits of switching home loans, ways to move forward on this path and the process of switching.
First of all, you should make a list of lenders who are offering home loans at a lower interest rate than your current lender. But it should also be noted that how many new borrowers are taking processing fees. After making the list based on these two things, you can start contacting such lenders. If your repayment record is better and your earnings are good, then every lender will offer you your offer. While evaluating all these, you can switch your home loan to the lending bank or housing finance company, where you have to make the lowest payment. While doing so, other costs should also be taken into account, such as valuation fees, attorney’s expenses etc.

Regarding the process

First of all, you have to give a written application to your current lender that you want to switch your home loan to someone else. After receiving such an application, your current lender may offer low interest rates to you. If you are not satisfied with this offer of the current lender, then you ask for a consent letter from him. This letter contains full information about how much debt you have taken and how much debt you have left over. This letter indicates that your current lender has given your consent for the decision to switch your home loan.
Now you can move forward with your new lender. With the new lender, you have to repeat the same procedure as if you are taking a new home loan. You have to fill out an application form for a loan. It has to be explained in detail about yourself and your income, investments, assets and liabilities. After this, the new lender assesses your house, on which you have taken a home loan. After this assessment, the lender gives you a home loan approval.
But the new lender will lend you only when your home papers are given to him. On the other hand, the previous lender will not refund your house papers until you pay off his entire loan. As a solution to this problem, you take a letter from your previous lender in which it has been said that after payment of the outstanding loan of the home loan, he will return the documents of your house within a specific time frame. These documents have been kept as security till the payment of home loan. The letter and the photocopies of your house documents are to be given to the new lender. After the home loan is allotted, the checks are given to the previous lender and the papers are returned and they are handed over to the new lender.

Why switch over

Now the question is: how much difference between the two interest rates should the client think about switching home loan? Also, how much time does it take after switching it after the home loan is most beneficial? Let’s understand this through an example. Suppose that a customer has taken home loan of Rs 7.5 lakh from a bank for 20 years (240 monthly installments i.e. EMI) at 10.95 percent. The customer wants to lend this loan in 20 years (i.e. no change in the period). Let’s also assume that the new lender will take 0.5 per cent of the loan as processing fee.

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