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Benefits of Home Loan Balance Transfer

In the case of a home loan balance transfer, a borrower closes the previous home loan account and starts a new account with a different lender. It offers greater benefits, such as a lower rate of interest (ROI), a shorter term, and so on.

Balance transfers on home loans are a realistic alternative for investors looking to switch from one lender to another in return for cheaper interest rates. The new lender authorises the takeover of your house loan and pays the current lender the outstanding sum. Following receipt of the outstanding payment, the existing lender releases the property documents and awards the borrower with a no-due certificate. These papers are given to the new financier. Once this process is completed, you must pay any future Equated Monthly Instalments (EMIs) as per interest rate rules.

Advantages of a Home Loan Balance Transfer

Banks and non-banking financing businesses make home loan balance transfer a realistic choice for investors looking to migrate from one lender to another that offers reduced home loan interest rates. When the new lender authorises the house loan transfer process, they pay the current lender the outstanding amount.

When the current lender gets the outstanding money, they release the property papers and provide a no-dues certificate to the borrower. Then transfer them to the new lender. Following this, the borrower must make the remaining equivalent monthly instalments to the new lender in accordance with their home loan interest rate regulations. The borrower closes his or her current house loan account and creates a new account with the new lender for greater benefits, such as a reduced home loan interest rate, term, and so on.

  1. Borrowers favour home loan balance transfers primarily to get a reduced interest rate on their home loans. A decrease in the interest rate results in lower EMIs and therefore, enhances their monthly savings. The procedure of transferring a house loan also helps to shorten the total term of the loan.
  2. A solid track record of payments, good credit ratings, and other considerations may help the borrower negotiate for better terms and conditions for the new house loan when choosing for a home loan transfer. This might be in the form of lower home loan rates or greater advantages than the current lender.
  3. When a borrower chooses to transfer a house loan amount, the new lender may also offer a top-up loan. This enables the borrower to obtain a new loan at a competitive interest rate to pay off other debts or to renovate the home. Although the current lender does not give a top-up loan even if the home’s real market value rises. The new lender uses the property’s current market value as a benchmark and can therefore issue a top-up loan.
  4. The borrower may also receive extra benefits, such as improved customer service, reduced EMIs, a shorter loan period, and other advantages that the current lender may not provide.

Features of a House Loan Balance Transfer

  • The process of obtaining a new loan is the same as the Balance Takeover (BT) of your home loan.
  • Your house loan is only eligible for a takeover after a set amount of time.
  • When another bank takes over your home loan, they transfer your outstanding principal amount to the existing lender. 
  • This process typically involves no takeover charges with your existing lender (when a loan is obtained in individual capacity). 
  • Before you contemplate transferring your house loan, you should have an excellent track record of repayment with your existing lender.
  • Before accepting such a transfer, certain financial institutions ask for a solid credit score and history.

Bottom Line

The home loan transfer process is simplified nowadays because all borrower information, such as credit score, is available online. This decreases the amount of paperwork necessary for a home loan balance transfer.

Additional Read: How to get Bajaj Finserv EMI Card Number Online?

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