Buying a property on loan has never been an easy task. Specially when there are fluctuations in the economy and the interest rates keep going high or sometimes low. In such a case, compounding plays a big roles in order to determine whether to stick with the present home loan or to switch to another bank for the home loan.
Very often it is the increased rate of interest, or a bank offering a comparatively lower rate of interest that brings the major difference. When it comes to the decision making, you should be well aware about the challenges in the process and the repercussions of transferring your home loan.
Keeping yourself aware about the process will save much of your time and will make you a smart borrower. While you may here suggestions and recommendations from your family and friends, we are here to guide you with 8 such challenges that you may face and how shall you solve/ avoid those roadblocks.
Before going further, you may like to read the earlier chapters of this digital loan series that will guide you through the entire process of home loan.
When you have decided your mind to opt-in for the new lender, the previous lender needs to give you the list of documents that include all the papers that you have submitted while processing the home loans.
This helps the new lender to recover all the required documents to process the new loan. But getting the LoD is not an easy process. Very often the lenders don’t provide the LoD initially for some technical reasons.
You should keep up following with the lender in order to get this. Another solution is to have it in the place from the beginning.
Chapter #1 of Digital Loan Series by WhatsLoan
This letter is issued by your current lender that mentions the outstanding principal amount, which can be paid off by the new lender.
Getting this foreclosure letter from the present lender becomes a tedious process as they try to keep negotiating to hold you further. This entire timeline goes really long and you may end up rethinking your decision again.
Chapter #2 of Digital Loan Series by WhatsLoan
When you are locked in any home loan, interest rate keeps intact; but when you consider switching your home loan there may be difference in the timeline of transfer of the loan and acceptance of the loan by the new lender.
You can control the issuance of the DD to the new lender but you can’t control giving the borrower the ‘credit date’. This difference in the timeline adds up the interest at your end.
Chapter #3 of Digital Loan Series by WhatsLoan
Sometimes when you negotiate your present lender to reduce the rate as you are deciding the options to opt-in for a better loan, the lender may ask you additional fees to reduce the rate.
You should avoid paying this as it costs nothing to them.
Chapter #4 of Digital Loan Series by WhatsLoan
Sometimes you may find a bank issuing a letter that includes a deadline to repay the principal amount after seeing the foreclosure letter. You may be asked to repay X amount that in valid for next 15 days only.
In any case, you should not accept such clauses. You can’t be stopped to repay the loan on 16th day in any case.
Chapter #5 of Digital Loan Series by WhatsLoan
Again a tedious process. You will recall having the doorstep service by the lender when you were applying for the loan but when it comes to collecting the original documents the lender will ask you to visit the office/ branch and will ask you to keep following up until you get your work done.
Chapter #6 of Digital Loan Series by WhatsLoan
By the way, do you know that we have built a Digital Loan Key, a unique financial identifier, that can retrieve your legacy documents (such as your Aadhaar card, pan card, bureau score, 10th mark sheets, birth certificate) online and enables you to get it verified within minutes and share with the lenders in one click.
The mission of this Digital Loan Series is to educate you and make you ready for the loan anytime!
If you happen to read this article, we assume you are somewhere in between of thinking for borrowing/purchasing a house. We recommend you to follow the series, or if you have any immediate query, reach out to us at email@example.com.
We also recommend you to share this with your people, your network, and younger ones so that they can be loan ready for the right time!