Buying your own home, gives such satisfaction and joy, that few things can supersede. Home loans are a blessing for people who dream of buying a house. It turns their dreams to reality.
And with reality comes, the many components of a home loan. Interest rate being the one that attracts maximum attention. The home loan market can be aptly called as the battle of the interest rates! Tenure, EMIs, documentation, etc. follow suit. The consumer obviously is the one who can benefit from the competition. But, as they say, options give rise to confusion. As banks roll out new and attractive offers every other day, it is difficult to be satisfied with the deal on hand. So are you thinking of shifting your home loan for a better deal? Here are a few points you must note:
Losing sincere customers who practice financial discipline is a lender’s nightmare! So when you spot the competitors hoarding with a home loan offer which is hard to refuse, make a note and discuss with your lender first. New lenders will welcome you, of course. But we all know the drill – credit checks, evaluations, verification, loan documentation etc will follow. Only when all conditions are met as per the new lender, the loan will be approved. That takes time, money and energy. All of which can be saved if you can negotiate and get a better deal from the existing lender.
In the interest of time
Before switching to better home loan deal offering a lower interest rate, check on the tenure. The remaining tenure of your home loan has to be considered if you are planning to switch. To make the package cost effective, the tenure will contribute along with the interest rate. So the deal will not be as attractive for somebody who is towards the last few years of loan repayment as against that for somebody who has just started servicing EMIs.
The cost of moving
Switching loans can be expensive. Even if the intention before doing so was saving! The costs need to be factored in while calculating the saving potential of a loan switch. Stamp duty, legal expenses, processing fees, and documentation cost add up to a substantial amount. Ensure that this expense does not nullify your saving amount. Some lenders charge a pre-payment penalty if the outstanding is cleared within a decided tenure. So check on that bit and factor in the cost before moving the loan.
Check on the CIBIL score
Consumers having a home loan running with a lender, tend to have a relaxed attitude towards the CIBIL score, unless of course another loan is planned. So when it comes to moving the home loan, this is among the last thing we think about. However, our new lender looks at it differently. CIBIL report and scores are checked thoroughly while evaluating a potential borrower who is planning a loan switch. If moving the loan is on your list, then start tracking your CIBIL score regularly.
Decide for yourself
Switching your home loan lender is a decision which will have a financial impact on your life lasting a decade or more. Hence, it is important that you are comfortable with your lender. A long term association definitely helps. Being associated with a lender who knows your better than the credit score can tell, is a huge positive. A lender who is supportive will stand by you when times get tough. So choose wisely before making the switch.
Disclaimer: All information in this article has been provided by Creditvidya.com and NDTV Profit is not responsible for the accuracy and completeness of the same.