Save your money post-lockdown! This home loan EMI transfer option will do just that - here is how

Home Loan EMI Transfer: Coronavirus lockdown has definitely hit the normal budget of a common man who has home loan EMI, car loan EMI and some other loans to repay. So, once the lockdown is lifted, what should be the first and foremost thing to do? Well, go through the list of other banks and their home loan interest rates! Borrowers will find that there is an astonishing difference in the rates offered by different banks. The range stretches from 7.15 per cent (offered by SBI) to around 10 per cent (offered by small lending companies). 

So, loan takers paying hefty EMIs can save money through the home loan EMI transfer option in a big way. According to the home loan EMI calculation, this nearly 2 per cent difference will help save a big amount.

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Home Loan EMI Calculator
Speaking on the current home loan interest rate and its impact on home loan EMIs, Kartik Jhaveri, Director — Wealth Management at Transcend Consultants said, "In current market scenario, on an average, a home loan borrower is paying around 8.75 per cent home loan interest rate. Keeping this in mind, if we use the SBI home loan interest rate that begins at 7.15 per cent, if a home-buyer borrows Rs 50 lakh home loan for the period of 15 years, his or her home loan EMI will be Rs 45,362 wile for a home loan that charges around 9 per cent home loan interest rate this home loan EMI falls at Rs 50,714 means this near 2 per cent of home loan rate of interest difference causes around Rs 5,000 extra monthly burden on you." 

Jhaveri further simplified the formula and said that in Rs 5 lakh home loan, the EMI difference is Rs 5,000 means Rs 100 per Rs 1 lakh. He advised home loan borrowers to calculate the extra money they are giving in their home loan EMI and advised them to go for home loan EMI transfer immediately once the lockdown is over.

Home Loan EMI Transfer Problem
However, to transfer a home loan, the existing lender needs to be paid first. It will not release the original documents of the property otherwise. However, the new lender will not issue a cheque, unless it receives the original property documents. So, how does one resolve this Catch-22 situation?

Speaking on the home loan EMI transfer, Mumbai-based Balwant Jain said, "A borrower can request his or her existing lender, to issue a letter to the prospective lender. This letter should mention the list of documents related to the property lying with the present lender, the outstanding loan amount, and an undertaking that the bank will hand over the property documents to the prospective lender, on payment of the outstanding amount." He said that the new lender will also carry out due diligence on the property and the customer, to assess the title of the property and the repayment capabilities and track record of the borrower.

On expenses required in home loan EMI transfer, Jain said, "The borrower may also have to pay the processing charges to the new lender. This may vary from 0.2% to 0.75%, from one lender to another and also depends on the applicant’s profile. At times, banks may waive the transfer fee or charge a nominal amount."