How Can Opting For A Home Loan Balance Transfer Get You A Better Deal?

By Author: Aditya Ahuja
Total Articles: 7
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The majority of people who have applied for home loans have wanted to switch to a new lender, especially if they are giving better offers and interest rates. It would not be wrong to say that everyone researches the market before applying for a home loan.

However, while you might have had chosen the best option available to you at that point, chances are there are much better offers at the table now. This is quite a common phenomenon; hence it is only smart to transfer your home loan to a new lender. This process is known as balance transfer home loans

What Should You Know About A Home Loan Balance Transfer?

More commonly known as refinancing, this service is offered by almost every lender giving home loans. However, you must have the required eligibility to be able to make this switch.

If you find a better deal somewhere else, you can always ask your current lender to evaluate your current interest rates. If your credit score and repayment track record are great, the lender might even reconsider the interest rates.

Is There A Perfect Time To Opt For Such A Service?

Now that you ...
... understand you can transfer your home loan balance without much hassle, the real question is if you should. Apart from a low-interest rate, preapproved offers, better repayment terms, and other services are good enough reasons.

However, this does not mean that you can transfer your home loan every time there is an interest cut in another bank. There are only a few instances when a home loan balance transfer with top-up makes sense.

1. Considerable Unpaid Loan Amounts:

Similar to the previous point, when there is a major portion of your loan still unpaid is when you should consider transferring the loan.
This will mean that a lower interest rate on the current principal amount will save you a significant amount of money. However, if you have only 5% or 10% of your home loan left to pay, sticking to the original bank is the wiser choice.

2. Significant Remaining Home Loan Tenure:

This is one of the first reasons that can make a home loan balance transfer worthwhile. Transferring your balance in the preliminary years of availing of the loan can be profitable. However, there is a transfer charge you need to pay.

It does not make much sense to incur such costs in the later years of your loan. You will eventually end up paying close to the same amount in such a scenario. So, make sure to check how long you have left on your loan before making this decision.

How Can You Benefit From A Home Loan Balance Transfer?

Here mentioned are some benefits of opting for home loan balance transfers are:

• Save Money:

As is evident by this article, the main reason why people opt for home loan balance transfers is because of the overall money they save. The transfer will not only offer you better interest rates, but with that, you also reduce the EMIs, and in turn, the total cost.

• Top-Up Loan:

You might suddenly need additional funds, maybe for a wedding, debt consolidation, or just some help renovating your property. In such cases, a balance transfer can offer you with home loan top-up. This is quite similar to a personal loan and comes with no-end use restriction. Moreover, as per Section 24 (b), you can also get your income tax benefits of up to 30,000 INR if you are using this loan for home renovation.

• Get Supplementary Funds:

Many times, after you have availed of a home loan, your funding may increase. In such a case, you will need extra funds for home extensions or renovations. A home loan transfer is a good idea as it might help you get such funds.

Things To Check Before Transferring Your Loan

However, transferring your home loan might sound appealing. But there are some things that you should ensure before transferring the loan. Start by checking:

• The lender’s credibility
• Cost of refinancing the loan
• Explicit terms and conditions of the new loan

With this information, you can now decide for yourself if a home loan balance transfer is a good option for you. Rest assured, with all the parameters considered, you will be able to save a significant amount of money with the transfer.