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Old 06-05-09, 12:26 PM   #1
kumaran's Avatar
Join Date: May 2009
Location: Bangalore
Posts: 359
Default Loan Transfer - Prefer Nationalised than Private Banks

You can transfer the home loan to any other bank. The bank will carry out a valuation of the property to estimate the current market value. Based on the current market value, they will offer you a home loan. Part of this amount will be paid directly to the company to take over the loan and the balance can be paid out to the applicant.

Now that all home loan borrowers are under the spell of decreased interest rates leading to decreased EMI. Especially Nationalised banks are giving good interest rates comparing to others. They are giving from 9.25 to 10% than other private banks.

As prepayment entails penalty besides lump sum funds, switching to lender offering better rates looks like a feasible option. Also known as Balance Transfer (BT), the process here is very similar to that of home loans.

Two aspects associated with BT are prepayment penalty and processing fee.

1. Lending is the business of the bank and the interest on the loan, one of its major sources of income. This is one of the major reasons why a bank would charge a consumer, should s/he desire to switch lenders. This charge is known as 'prepayment penalty', the definition varying from bank to bank. Normally, a bank will charge up to 2 per cent of the total loan outstanding as a prepayment penalty.

2. Just as there is a cost to pay for a transfer, the new lender will also charge a processing fee to take over the loan. It can be about 0.5 per cent to one per cent of the total loan amount one applies for.

It is necessary to check the probable terms and conditions relating to the loan transfer charges to be borne by the applicant. Better not to switch more often and stick to some nationalised banks which is always beneficial for the consumers..Now the nationalised banks are announcing offers like 0% processing fee for the new loans we are applying to them..We can catch up this opportunity and transfer our loans from private banks to nationalised one to have less interest rates during our period of loan repayment.

Please see the Interest Rates..Natinalised banks has less interest rate than others. You can compare Interest Rates you are currenlty having..

Axis Bank - 9.75
Bank of Baroda - 9.25
Bank of India - 9.25
Bank of Maharashtra - 9.25
Canara Bank - 9.25
Central Bank of India - 9.25
Dena Bank - 9.25
Deutsche Bank - 11.25
HDFC - 9.75
HSBC Bank - 12
ICICI Bank - 9.75
IDBI Bank - 9.75
Indian Bank - 9.25
LIC Housing Finance - 8.75
Punjab National Bank - 9.25
State Bank of India (SBI) - 9.25
Union Bank of India - 9.25

More on Home loans you could refer

Last edited by kumaran; 06-05-09 at 12:29 PM. Reason: typo error
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Old 06-05-09, 10:46 PM   #2
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Join Date: Mar 2009
Posts: 5,513

Hi Kumaran,

OK ~ let us go one-by-one form your explanation from the beginning about the charges incurred in the transfer financier ownership, we go;

1. Pre-payment penalty - 2% from TLO(Total Loan Outstanding).
2. Processing fee - 1% from TLO

Dear Kumaran,

At first, I thought the nationalised banks going to undertake base on "Full Settlement Balance" counts on the date or month of transfer done and not the TLO.

I hope you understand for what they mean for TLO. It means that it taken into account all the interest rate incurred in the previous loan tenure. Easy saying, it takes whatever balance from the first lender. Although that loan already active for 10 years and the remaining is for another 10 years only - it counts the interest rate for 20 years in the TLO and not only 10 years on the date of transfer as full settlement for interest calculation.

In general, it will back to square one and the only thing is we heard the new interest rate is lower.
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Last edited by michaeldadona; 06-05-09 at 10:48 PM. Reason: typo
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Old 07-10-09, 02:44 PM   #3
Join Date: Sep 2009
Posts: 148

Taking a loan in a nationalized bank is always good than depending on those private banks
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