THINGS TO CONSIDER BEFORE APPLYING FOR HOME LOAN BALANCE TRANSFER

Are you thinking of buying a new home or already have one? Either way you should always be on the lookout for reducing your monthly burden by seeking a lender who provides you the best terms on a home loan. We opt for a home loan that offers the lowest interest rate in the market along with the longest possible tenor to keep the EMIs (equated monthly instalments) burden minimal. Interest rates on all home loans are linked to external benchmark rates in India, which are regularly revised based on the economic conditions. Therefore, people with ongoing home loans should still always be on the lookout for a lender that can provide a rate lower than their current home loan. In other words, if your current lender is not willing to re-negotiate the interest rate, go for a home loan balance transfer. 

What is home loan balance transfer? Refinancing your loan & way to transfer balance of current loan to new lender, offering benefits, like low interest rate.Your new loan provider repay amount & close old loan, release fresh loan amount with lower interest rate and other benefits. From that point onwards, you EMIs will be paid to the new lender. There are other things to consider as well before applying for a balance transfer.

Things to Consider Before Applying for Home Loan Balance Transfer

• Savings on Interest Rate

The main objective for considering a home loan balance transfer is benefitting from lower interest rates. The home loan interest rates in India are either fixed or floating. When interest rates in economy decline, not necessary, your lender pass on entire benefits to you for various reasons. If current loan is on higher & financial institutions offering low rate, opt for balance transfer can help you reduce loan burden. Loan balance transfer calculator helps you understand how much you can save on transferring your existing loan to another bank.

 

• Eligibility 

Eligibility is always the base criteria for successfully applying for any home loan due to the large amounts involved. Before looking for home loan transfer you need to check if you are eligible to apply for one. The best way to check is through your credit score. Your credit card score shows if you have paid your EMIs on time or have outstanding loan liabilities. There are possibilities, that your current lender’s policies may restrict you from transferring loan balance to another institution. 

• Option of Loan Top-Up and Changing Loan Tenor

Once your home loan is approve, you cannot change tenor of loan or increase limit on same loan. Opting for balance transfer with new lender give you advantage of reducing your tenor. If you have additional funds to repay, or increase it to reduce the pressure of repayments. An additional amount/top up can also be availed of with the new lender for expenditures like renovations, interior work, etc. This top-up amount is added to the balance of old loan amount and can be repaid through the EMIs.

• Opt for Home Loan Balance Transfer in the Early Years of Loan Tenor

It is profitable to opt for a home loan balance transfer in the early years of your loan tenor. Most of interest amount repay initial years of loan, refinancing loan in later years of tenor might not wise decision as you can already repay most of amount through EMIs. 

• Opt for a Lender with Credibility and One Who Offers Best Experience

Taking home loan can be a stressful task, hence it is important that you avail of services from a lender with proven credibility and one who is known to offer best experience. While lower interest rate is often the biggest motivation behind home balance transfer, some offer it only for a short-duration as part of promotion.  Hence, it is important that you read the terms and conditions along with customer reviews and experiences before transferring the home balance to a new lender.

• Calculate Overall Costs

While planning balance transfer, must take account fact that facility is not free, you charge fees by lender towards pre-closure charges. The fees by the new lender will be in any of the following forms: stamp duties, processing fee, and transfer fee. Balance transfer is benefiting only if your total savings on the entire loan amount is higher than the fees.