Purchasing a house is one of the most significant financial responsibilities that an individual can take on during his/her lifetime. In this regard, high real estate prices and a deficiency of funds can become hindrances in purchasing a house. Opting for a home loan comes with long term financial liabilities that can be difficult to settle without sound planning. When deciding to avail a housing loan, it is essential to thoroughly consider multiple factors such as interest rate, repayment tenor, and other associated pointers to eliminate the chances of default.
Under certain circumstances, a borrower in due course of the loan tenor may find a lender offering lower interest rates and favourable terms of service. In such cases, they can choose to refinance the loan amount by opting for a home loan balance transfer.
What is a balance transfer?
Balance transfer or refinancing is a procedure that allows individuals to benefit from the lower rate of interest offered by financial lenders. A home loan transfer helps individuals reduce their EMI amount by shifting the outstanding loan balance from one financial institution to another, offering lower interest rates.
One can opt for the home loan balance transfer facility from most financial institutions with lucrative schemes and affordable interest rates. Some of the benefits of a balance transfer are discussed below.
Benefits of balance transfer
- Lower interest rate
One of the primary reasons to opt for a home loan balance transfer is to avail competitive interest rate. On opting for housing loan interest rate, the EMI amount will decrease and automatically reduce the financial burden. This is how one can reduce EMIs with a home loan balance transfer.
- Top-up loans
Apart from availing lower interest rates and better repayment terms from financial lenders, top-up loans are provided as an additional benefit over the sanctioned credit amount. HFCs offer a top-up loan amount on the existing home loan amount to aid borrowers to bear any extra expense that may occur while purchasing a house. The top-up loan interest rate is much lower than any personal loan interest rate.
By using a top-up loan calculator, one can gauge the amount that he/she can avail on top of the existing housing loan.
- Repayment terms
Financial institutions levy different terms and conditions on home loan repayment procedure. So, if any financial institution offers better terms and conditions, switching your loan balance can be lucrative.
- Pre-approved offers
Few financial lenders extend pre-approved offers that can make availing the loan faster and easier. These offers are available on several financial products, including home loan, loan against property, etc. You can check your pre-approved offer by providing your name and contact number.
- Prepayment and foreclosure charges
There are associated charges related to home loan refinancing. Such charges are imposed if the repayment is made before the tenor. Prepaying an existing loan amount or foreclosing it without additional costs can allow individuals to save a significant amount on their payable interest.
It should be noted that the benefits of a home loan balance transfer can only be availed if borrowers meet certain eligibility criteria. If another financial lender provides better repayment terms, then the existing lender can be requested to negotiate the interest rate, and it can be done based on credit score and repayment history of an individual. This is among one of the most important factors a borrower needs to know about balance transfer.
Opting for a home loan balance transfer from reputed HFCs will not only reduce your monthly outgo but can also impart exclusive benefits. You need to verify the terms and conditions beforehand to initiate a balance transfer.
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