Purchasing a home requires a large amount of money and hence, a large number of home buyers avail home loans to purchase their dream house. Home loans are a great financing option to purchase a house. With the advancement in the Banking and Finance Sector, a large number of lending institutions offer enticing policies and attractive interest rates on home loans. The lower the interest rate on a home loan, the lower will be the repayment burden. Keeping this in mind, a lot of loan providers have come up with the concept of home loan takeover.
Let us have a quick look about the details of home loan takeover and the procedure for the same:
Home loan takeover
- A home loan takeover is similar to a home loan balance transfer wherein the borrowers can transfer their home loan to another lending institution that offers them better interest rates. This will allow them to lower the EMI burden and loan tenure.
- While opting for home loan transfer, the borrowers are required to satisfy the eligibility criteria set by the financial institutions. Different financial institutions have different parameters to approve the home loan takeover.
- If borrowers have paid their monthly EMIs regularly, it improves their credit score as well as their chance of approval for home loan takeover.
- The process of home loan takeover involves minimal documentation. Financial institutions would require documents supporting your ID proof, address proof, purchase of property and regular payment of EMIs.
Procedure for home loan takeover:
- Borrowers should submit an application to their lending institutions requesting for the home loan amount, title deeds and other securities.
- Borrowers are also required to submit the information regarding the outstanding loan amount.
- In addition to the above-mentioned documents, borrowers are expected to submit the account statement of the last 10-12 months as demanded by the lending institution.
- A confirmation letter from the financing institution that they are offering the takeover loan amount.
However, if you have already completed a major portion of your loan tenure, opting for a home loan takeover would not be a wise decision as you will have to pay balance transfer processing fee and other charges. By paying such charges, you may end up paying even more amount than required. Hence, you must access all the aspects of a home loan takeover before going ahead with it.
Some of the major benefits of availing a home loan takeover are stated as under:
Lower interest rates:Â Most borrowers opt for a home loan balance transfer if they find a lender that provides home loan at a comparatively lower interest rate. This is because even a slight reduction in interest rate can help them save a large amount in the long run. Since home loans are pledged with collaterals, a lot of financial institutions offer loans at lower interest rates.
Pre-payment facilities: The home loan balance transfer does not block the facility of loan pre-payment. Therefore, the loan can be pre-closed at the borrowers’ discretion.
Top-up value: As a result of the high top-up value, the loan repayment will be faster with fewer amounts towards interest.
Now that you are well aware of the benefits of a home loan transfer, ensure that you make the most of it by assessing all the aspects related to it. It is essential to be well versed with the nuances of home loan takeover before opting for it. Lastly, while transferring your existing home loan to a new lender, make sure that you read the terms and conditions of the new lender carefully. This will help you avoid any inconvenience in the later stage.