Availing the lowest home loan interest rate is one of the primary concerns of borrowers while applying for a housing loan. Home loans are long-term funds. Thus, the repayment tenure of such loans is also lengthy. Over the years, a home-loan borrower might come across a financial institution offering better home loan interest rate.
Thankfully, a home loan can be shifted from one lender to another if a borrower wishes to. This facility is called balance transfer or refinancing an existing loan. The remaining loan balance is shifted to the new lender. The borrower now has to repay the remaining amount at the interest rate charged by the new lender.
For example, let us consider that someone borrowed a home loan at 8% interest rate. After 3 years of paying EMIs, the borrower finds it difficult to arrange the monthly sum. As such, he can look for lenders who are charging comparatively lower interest on home loans. This could be anything below 8%. The EMIs too will come down substantially, easing it for the borrower to repay the loan.
Know more about balance transfer to avail lowest home loan interest rate
Reimbursing a housing loan is a huge financial liability. Keeping an eye on the lending rates is important not only before availing a loan but also while you are repaying it. This is what helps in finding out the lowest home loan interest rate. One of the top tips to reduce home loan interest outgo is to refinance your existing loan.
Most reputed financial companies allow home loan balance transfer facilities to their customers. However, there are certain conditions which must be fulfilled by the borrower while switching a lender. Some of these conditions or terms are as follows:
- The property for which the home loan has been availed must be already occupied or ready to be occupied.
- The borrower must have already paid 12 home loan EMIs to the existing lender.
- He/she must not owe any outstanding debt on the property.
One of the crucial tips for refinancing your home loans is also to arrange the necessary documents before applying for a credit. This would enable a faster home loan balance transfer. The mandatory documents required for housing loan balance transfer include:
- Form 16 or the latest salary slips (for salaried individuals)
- Balance sheet as well as profit and loss account statement of the preceding year (for self-employed borrowers)
- Income Tax Returns of the preceding year
- Business registration certificate (for self-employed borrowers)
- Bank account statements of the last 6 months
KYC documents like identity proof and address proof are also mandatory for salaried and self-employed borrowers. These documents include Aadhaar card, PAN card, driving license, passport, NREGA card, Voter ID, etc.
If balance transfer is considered, looking for a low interest rate is not all that is required. Alongside with a cheaper interest rate, the new lender must also offer attractive benefits and the best facilities.
For example, various HFCs (Housing Finance Companies) and financial institutions now extend pre-approved deals to the customers. One can check the pre-approved offers even before applying for a loan. These offers facilitate personalised benefits on loans and faster disbursal of funds.
Shifting an existing home loan to a new lender offering the lowest home loan interest rate can bring down your EMIs at least by 13%. It can prove to be the most effective methods to reduce the EMI burden.