Problems Faced in Home Loan Transfer

Getting a Balance Transfer of BT can be quite lucrative. It may seem to you that the grass is greener on the other side, or that there are many, many benefits waiting for you after getting the Balance Transfer. Banks do offer lower interest rates in BTs, but there are still charges and procedure to be aware of.

If you are not satisfied with the loan you have, or if you are finding it hard to repay it back, or if you just want to bring down the interest rate, a Balance Transfer is the best solution. This is your Plan B, if the first loan is not working. Maybe you have seen that the first bank is not giving good service and just want to switch to another one, or maybe you want to renegotiate the terms of the loan but your bank doesn’t want to hear anything about it. The reason can be anything, but at the end of the day, you know a Balance Transfer can help you in all of these circumstances. 

Why did Balance Transfers Start?

Earlier, banks did not want to reconsider the interest rates or repayment terms and durations. After all, from the point of the banks and lenders, if customers were allowed lower interest rates suddenly, the banks themselves will lose out. Since customers would save more in case of lower interest, they’d repay faster, and that the banks were not ready to allow. 

However, as we shall see below, Balance Transfers come with their own slew of problems. 

The process

There are some things in the process itself which you need to be aware of. To even begin the process, you need to get an NOC letter from your current lender, along with a letter from them telling your new bank the outstanding amount of the loan. These are to be submitted to the new back. 

Now the process begins. Your new bank, to which you are transferring the loan, shall treat it as a new loan. This means you’ll have to do the documentation process all over again. For this, you’ll have to submit documents like photo IDs, salary slips, employer’s letter, bank statements, among others. If you are transferring a home loan, you need coordination and follow-ups. You also need to pay all the fees and charges again!

Problems crop up when a co-applicant of the loan is retired, or when your income level has decreased. In this case, the bank can deny you the service. They can also deny you the BT if you were not paying your EMIs regularly.

Now, if the bank is satisfied with everything, they shall sanction the amount.

Because of all these problems, many choose to stay back with their current lender.