Either you have considered the prospect of a Home Loan Balance Transfer, or you are already in the middle of the process. Whatever may be the case for you, the idea of a Home Loan transfer can be an attractive one.
You apply for a Home Loan at a fixed rate of interest only to find out that some other lender is offering a lower interest rate, the option of a Home Loan transfer can give you a sigh of relief. A Home Loan Balance Transfer comes with a lot of benefits.
However, before you understand the benefits that come with such a transfer, here are a few things that you need to know:
The Process of Home Loan Transfer
What does a refinance Home Loan involve? In a nutshell, it is the process of repaying your Housing Loan with another loan from another bank or NBFC. There are many reasons one might consider a refinanced Home Loan. The most important of these reasons is a better interest rate.
The interest payout of your Home Loan depends on your Home Loan interest rates. Repayments are never easy as a major chunk of your salary goes toward the paying the EMI. Even a mere difference in the interest rate can impact the interest payout to a great extent in the long run.
It will reduce the EMI amount as well. All you need to need is a find a lender who is offering a lower interest rate and transfer the loan amount from your current lender.
Let’s take a look at the benefits of a Balance Transfer in the case of a Home Loan:
Benefits of Home Loan Transfer
1. Low-Interest Rates
Perhaps the primary reason for anyone to seek out a Home Loan transfer in the first place is a lower interest rate. Any transfer scheme should ensure that you have a lower interest rate as compared to your existing Home Loan. You then can save a lot on the repayment of your new loan.
You only have to keep an eye on the Home Loan transfer charges. Lower EMIs also make repayment of your new loan easier on the pocket. However, there may be stamp payments and other charges that might make a Home Loan transfer not worth your time. Take all of them into consideration.
2. Benefits of a Top-Up Loan
A Home Top Up Loan might not seem like a necessary thing, but it can always be helpful. Since your home is new, there might be expenses you haven’t planned for yet. If you get a top up on your existing loan, without submitting a collateral, then you’re already better off.
You might have to hunt around to find a transfer loan that comes with a top up though. There are quite a few lenders who offer top-up loans and some allow you to use this money for any purpose of your choice. This is a huge benefit as you can use the money to fund your child’s education or even for sponsoring your foreign holidays.
3. Better Customer Services
If you’re unhappy with the services of your current lender, you can consider a Balance Transfer as well.
Remaining Tenor for Repayment
Consider this seriously if you’re thinking of a Home Loan transfer. A Balance Transfer will only help you if you have considerable tenor left in your present loan repayment. If you have a decade or more of left, then it would benefit you greatly to opt for a Home Loan transfer scheme that gives you a better rate. Make both the calculations and compare the saving before making the final decision.
Terms for Opting for Home Loan Transfer
The effort you put in for a Home Loan transfer cannot be measured in monetary terms. A good rule of thumb to follow is to shift as early in your tenor as possible. Always remember that most banks and NBFCs are willing to hold onto their customers. Talk to you present lender before taking this decision. Ensure to compare different options available in the market.
The cost-benefit analysis of a Home Loan transfer must be weighed out in a timely manner before the process begins. You might end up with a deal that takes a huge toll on you but gives you a small benefit in terms of financial savings.