Transferring your home loan to a lender that gives you better terms and lower interest rates may seem like a great idea. Most of the time, this is true, but sometimes you would not benefit from such a move.
Let’s take a look at some of the things you should know before transferring your home loan. Then you can decide for yourself if you should jump to accept the offer you have been eye-balling.
- Set Your Goals – Transferring your home loan to a lender offering better rates can be a blinding task. That means that if you see an offer that is way lower than yours, it is hard not to jump at it without knowing what you want in the first place.
Take the time to sit down by yourself or your significant other if they are involved in the decision, and analyze your goals. Why do you want to switch lenders? Is it to get better interest rates because your current lender has horrible customer service, or maybe you want to change to a local bank.
Whatever the reason is, write it down and memorize it because that is what you will look for in a new home loan, and you will ignore everything else.
- Check Your Financial Situation – You need to double-check your current financial situation to ensure that it is the same or better than when you first got the loan. Things can happen within a few short months, so you want to check your credit score, budget, and payment histories.
If any of this has gone downhill, you may not even qualify for another loan. Since you will take a hit on your credit score when they run a check, it will go down even further. Make sure you are eligible for another loan before you attempt to get one.
Another Down Payment – You may have to pay another down payment for the new lender to go with it. If you remember from before, you may have to have up to 20% of the total amount of the loan you are looking to get.How much deposit for home loans will be up to your credit, financial standings, and the lender you are going through. Some may simply transfer the loans over and only charge a small fee. In contrast, others will treat it like a refinance loan and charge you the original fees all over again.
Compare Your Options – You never want to go with your first choice. You need to go online and find an online comparison site, such as iSelect, and let them do all the leg work for you.
They will take your information and search through their databases to find some partners willing to work with you. All you have to do is go through the offers and find the best one for you. The one that gives you the best terms and rates.
Talk To Your Current Lender – Before you make the leap and switch lenders, you may want to have a civil chat with your current one. They may be willing to work something out with you to keep your business with them. If not, they obviously do not want your money so switch over to one of the other options.
That is all that there is to. If you are in a position where transferring your home loan to a new lender would be beneficial, you will want to go ahead and do it before the offers change. The longer you pay on the original loan, the less it will benefit you to switch.
If you have already paid a substantial amount of money into the loan, you may be better off getting a refinance loan that offers better rates, plus you would be able to get a cash-out loan on the equity that you have built up. The choice is yours, so make sure you choose the best route for you and your family.