How Home Loan Balance Transfer can Benefit You

What is a home loan balance transfer?

A home loan balance transfer is an option that allows you to switch from your existing home loan to a new home loan when you find any reduction in the rate of interest due to the fluctuation in the market conditions and the lending rates. When a home loan borrower opts for this facility, the entire unpaid principal amount of the loan is transferred from the existing lender to a new lender.

Home Loan Balance Transfer

What are the reasons for opting a balance transfer on your home loan?

Following are the reasons one opts for a home loan balance transfer:

1) If you are paying a relatively higher rate of interest on your existing home loan as compared to other banks in the market

2) If your current bank is offering you a lower home loan tenure than the other bank

3) One may also think of a home loan balance transfer if he is facing some service related issues with the bank

What are the Advantages of a Home Loan Balance Transfer?

Following are the benefits you will receive when you opt for a home loan balance transfer:

1) Lower interest rates

This is the most common reason for opting a home loan balance transfer on your existing home loan. The reduced or Low Interest Home Loan on will lead to lower EMIs and hence more monthly savings which you can spend somewhere else you want. This will also lessen out the overall tenure of your existing home loan.

2) Good repayment track record may get you good Rate of Interest

You are free to negotiate the terms and conditions of your home loan with the lender if you keep a clean and good repayment record during the past. Having a good repayment record will help you to get a lower rate of interest from your lender.

3) You can get a top-up loan

Many financial institutions offer the facility to avail a top up on your existing home loan. You can get access to some extra funds in the form of a top-up loan. The funds can be used for any general or personal use like home renovation, managing your child’s higher education expenses, etc. The loan is available at a low rate of interest with the same long tenure as your home loan, making repayment easy.

4) Interest rate differential

This is one of the reasons due to which you opt for a balance transfer on your home loan. This means your current lender is charging a higher rate of interest on your ongoing home loan as compared to other banks. But before you finalize a decision to switch your home loan from the old lender to a new lender do not forget to take into consideration the important calculation that would help you to save really a good amount in the near future to easily manage other expenses as well.

5) Keep aside prepayment and foreclosure worries

When you opt for a home loan balance transfer, you will also be able to enjoy excellent part prepayment and foreclosure terms. You are not required to pay any sort of hidden charges when it comes to foreclosure or prepayment. You can make a prepayment post paying the first EMI, as long as its value is greater than or equal to that of 3 EMIs.



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