Here’s how you can transfer your home loan from NBFC to a bank

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If you have a home loan running in a non-banking finance company, you may want to transfer it to a bank. The process will not be simpler but you should still give it a try considering the high interest rates that NBFCs charge on home loans compared to the banks. If you have improved your credit score, then you should definitely take a chance at transferring the home loan to a bank.

Adhil Shetty, CEO, BankBazaar.com, said one should negotiate with the current lender.

“Negotiate with your current lender before you switch, especially if your credit score has improved. Your existing lender will offer you options in order to retain you. Have an exact picture of what you stand to gain by transferring your loan to a different lender and compare it with the offers. Figure out what is less expensive in terms of money, time, and effort, and then take a decision,” said Shetty.

The process

If transfer seems to be the viable option, the first step is to zero in on a couple of banks in which you want to apply for the loan transfer. Check their eligibility criteria and terms and conditions.

“Most banks have their own eligibility criteria for balance home loan transfers. When you choose a bank for a home loan balance transfer from NBFC, you first need to check if you meet the respective bank’s terms and conditions. Once you have decided to go for a home loan transfer, you need to get NOC from your NBFC that will mention your total outstanding amount,” said Shetty.

Key things to keep in mind

Home loan EMIs keep running for over a decade or two. You should transfer your loan if you are in the initial phase of your loan tenure.

“This is because your EMI outgo in the initial phase of your home loan comprises a major part of interest payment and switching in this phase would mean savings,” explained Shetty.

When you are closer to the end of the loan tenure, the EMI will have more principal component to it. It doesn’t make much sense to transfer the loan then.

Also, make sure to factor in processing fees and other such charges.

“While switching, do factor in charges such as processing fees, penalties, MoD charges, legal charges etc. to get an estimate of how much you will save. Do go through the terms and conditions carefully. This will help you avoid any inconveniences later,” said Shetty.