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Update Date : 03-Jan-2023

Created Date : 03-Jan-2023

Category : Home Loan E-Book (Promotional_BT)

Here's why borrowers transfer their home loan account to other lenders

With RBI ruling out pre-payment penalties on all floating rate home loans that are availed by individuals, the transactions involving the transfer of home loans from one lender to another have shot up significantly.

Such transactions not only help borrowers ease their interest burden but also help them exploit many other benefits that the refinancing option offers.

Beyond saving them interest, this eventually helps them streamline their finances as well.

Refinancing options enable borrowers to restructure their home loan, lower their EMI, open new opportunities to invest and many more.

Today, in this chapter, we will discuss all such benefits and value that you can derive by refinancing your home loan.

1. Better interest rate – The drop in property sales has compelled most financial institutions to shift their focus from new loan disbursements to acquiring existing home loan portfolios of other banks.

While they continue to target new home buyers, they have become more aggressive at tapping existing loan portfolios of other banks.

This situation is working out well for all existing loan borrowers as they are now enjoying an upper hand while negotiating for the best terms by switching over their loans to new lenders.

2. Better products – The home loan industry has evolved significantly over the last few years.

With the arrival of new and innovative products like home loan overdraft facilities, the financial life of many of the existing borrowers has improved significantly.

Now, they can not only enjoy higher savings on their home loan but can also make their financial life much more secure and stress-free.

Hence, while you search for the best rates available in the market, you must also explore products that compliment your financial situation.

3. Top-up – Top-up loans can be used to fund your personal expenses or consolidate all your existing loans into one at much more favourable terms.

It carries the minimum rate of interest with maximum tenure as compared to any other form of personal loan. This releases pressure from your stressed cash flow to a larger extent.

All existing home loan borrowers can avail of this facility at the best terms while refinancing their home loan.

4. Service issues – Constant service issues is one of the major deterrents why borrowers leave their existing lender and switch over to another.

The time-consuming process of making part prepayments and slow responses to queries and requests are some of the most common issues that trigger borrowers to change lenders.

5. Trust & behaviour issues – The market rates have dropped but yours haven’t.

Secondly, your lender is offering better rates to new borrowers that are way lower than what they are charging you.

These are some of the differences that create trust and comfort issues.

And to top it up, when you are made to make rounds to their branches, and pay conversion fees all the time to get better rates, you are bound to feel discontent and cheated.

This compels them to switch over to lenders who they believe will be more responsive to rates transmission and charge them fairly.

6. And many more…