Getting a home loan balance transfer has become quite common these days. A home loan balance transfer is the act of shifting your existing home loan to a new lender. The transfer is done mainly because a different lender offers a lower rate of interest. There are several other benefits of a balance transfer. Let us take a detailed look.
Benefits of home loan balance transfer
Here are some of the most prominent benefits of a home loan balance transfer:
Lower interest rates –
As mentioned above, the main reason why people opt for a home loan balance transfer is the difference in the interest rates. Let us assume you are paying a home loan interest rate of 8.3% currently. You come across a bank that offers the home loan at 7.8%. You will immediately consider making a shift, as a higher interest rate would mean repaying a higher amount to the bank over the entire duration of the loan. It is therefore wise for you to compare the home loan interest rates from time to time and see if a bank offers a lower interest rate.
“Expert Tip: If you find a good option, you should definitely consider transferring your loan to the new lender.”
Better EMI structure –
When the interest rate is lower, your overall loan liability decreases. This can lead to a change in your monthly EMI rates.
For example: If you were paying Rs. 30,000 each month to clear a loan of Rs 40 lakhs at a rate of 8.3%, you will have to pay lower EMI after the interest rates drop.
This proves to be a convenient financial gain and leads to extra savings each month.
Lower loan duration –
A home loan balance transfer can also lower your home loan duration considerably. When the interest rate reduces and the EMI structure changes, you can plan in such a way that you pay off the remaining loan sooner.
“Expert Tip: If you save money from the EMI payments, you can invest it wisely and build up a corpus. Foreclosing the home loan with that very corpus may also be a very achievable target you set for yourself.”
Top up loan –
At times, a top-up home loan is needed to either pay for an extra component of the house, to renovate the place, to get the interior designing work done, etc. Many existing home loan providers deny the top-up loan. At such a time, a balance transfer helps.
“Expert Tip: You can easily look for a new lender who would offer a top-up loan when getting the existing home loan transferred.”
Better customer service –
Last but not least, a big reason for a home loan balance transfer is often the lender’s service. If your existing lender’s post loan customer service is not, you might have a tough time dealing with them.
“Expert Tip: Look for a lender who offers better customer service and smoothly get the home loan balance transfer done.”
Steps on getting the home loan balance transferred:
As you can see, the benefits of getting the balance transferred are many. Thankfully, the process is very simple too. You need to finalize the deal with your new lender. Post that, the lender will give you the check to deposit with your existing lender.
Once you do that, the existing home loan is paid off and the bank hands over the original housing documents to you. You then surrender the documents to your new lender and the home loan is transferred. You continue paying the EMIs and repaying the loan. The credit score is verified online by the new lender, so the documentation process becomes hassle-free and straightforward.