How to Switch Home Loan from One Bank to Another
The sudden upsurge in private sector banks has compelled each of them to come up with services at competitive rates. One such product that has evolved immensely and for the good of customers is home loan.
The hyper-competitive market is readily offering with lower interest rates. Therefore, people are increasingly considering the idea of switching their home loan from one bank to another. However, lower interest rate or lesser EMI's shouldn't be the only reason to take the step. Let us help you make a smooth transition from one bank to another.
Calculate the total outflow
The whole idea of lower interest rate and smaller EMI's may seem to be lucrative. However, one needs to calculate the total outflow of cash for the current bank and the bank you desire to switch with. For instance, if a bank is offering you smaller EMI's, that means the tenure of the loan increases. Therefore, increasing the total outflow hiked as the interest keeps on adding. So, it is always advisable to pay larger EMI's if you can afford and finish off the loan as soon as possible.
Study the processing fees and other allied charges
When making a home purchase loan transition from one bank to another it definitely doesn't happen free of cost. Your current bank definitely charges you with certain fees in the form of processing fee; stamp duty, other legal procedures etc. Calculate the charges incurred for these processes and savings made by switching to another bank. Analyse if there is a net benefit or net loss happening in the entire transaction.
Other attached frills on offer
With the whole objective of luring customers to make a switch from their current bank, many banks offer add-on benefits. Offering a free credit card or personal accident insurance tops the list of add-on benefits offered. However, there have been circumstances where the customer has been pushed with fees for credit card transaction after a year as the credit card was free just for a year.
All banks are eventually there to lend money. No bank would like to offer you less rate of interest when others are earning at high rate of interest. Therefore, be completely sure before making the switch.