3 Important home loan terms before you switch3 min read
Home loan switching is the process of transferring the loans from one borrower to another. In the case of the balance transfer, the loans interest rates get reduced and thus the borrower can save on interest payment. The loans taken should be repaid on time by the borrower to avoid penalty being charged. The home loan industry is growing at an annual rate of 22% per annum. There is a continuous increase in the disbursement of home loans. Also, even new finance companies and small finance banks are coming up in the markets to disburse loans. Thus the competition between the lenders is becoming more and more endangered. Loans help people plan and buy a house at the early stage of life and also help to boost the real estate industry. The government of India is also optimistic about giving a boost to the real estate industry. The PMAY[Pradhan Mantri Awas Yojana] helps increase the people’s financial ability for the purchase of the flat by providing the subsidy amount of Rs.2.67 lakh under the housing for all scheme. The real estate sector is the second largest employer in India after agriculture and employs both the blue-collar workforce and the white-collar workforce. The investment by the people in the real estate sector provides a great boost to the economy as the investment is huge in the real estate sector. Also, the government generates a substantial amount of money from the GST and registration stamp duty charges; thus, the real estate sector is an excellent source of income for the government.
The home loans interest rates are also declining, thus making it an attractive proposition for the borrowers for the disbursement of loans. Many flat buyers have been able to fulfill their dream of buying a home with the help of home loans. The public sector banks dominate the share of the home finance as the public sector banks are considered the most trustworthy ones compared to the private sector banks or the home finance companies with the 45% market share. There are multiple types of businesses being dependent for livelihood based on the real estate sector. The businesses like construction contractors, construction material suppliers, architectural firms, structural audit firms, RCC consultants, home finance companies. Etc. Thus the dependence of multiple businesses on the construction industry is huge. Thus the investment in the real estate sector has a significant positive impact on the economy. Home finance helps people avail loans and repay the amount to the banks for 10,20 or 30 years. Thus, it is beneficial for everyone in the real estate sector, flat buyers, and home finance companies; it is a win-win situation.
Important terms before you switch the loan
The bank charges processing fees to the borrower for the transfer of the new loan. The borrower should be careful while transferring loans to another lender as sometimes the bank may charge lower interest rates to the borrower but may recover the higher amount from the borrower. The borrower should evaluate the overall cost being charged by the bank and only then decide on the transfer of the loan.
A balance transfer is a process of transferring the loans to another borrower from one lender to other. The loans taken can be transferred to another lender at lower interest rates which can reduce the repayment value of the loans. A balance transfer can also help the borrower increase or modify the tenure of the loans.
Eligibility criteria for loans:
The eligibility includes proper documentation, a good CIBIL score, and also timely repayment of the loans. Also, the borrower should be financially stable and have a consistent income.
The loan transfer is one of the necessary parts for an individual in case of the higher amount of loans being charged by the borrower. The terminologies of the home balance transfer play an important role for the borrower in case of the borrower needs the home loan balance transfer. Thus the borrower must be aware of the terms & conditions of the balance transfer.