Friday, November 20, 2020

Learn About How Home Loan Balance Transfer Can Benefit You

The decision to avail a home loan is followed by taking into consideration various aspects, including the rate of interest, the period of repayment and other associated details in a thorough manner.

However, it happens far too often that after availing the funds, borrowers get to know that another financial institution is offering more favourable repayment terms or a lower rate of interest. In such instances, the loan may be refinanced by what is known as a home loan balance transfer.

What does the balance transfer of home loan encompass?

In case of a home loan balance transfer, it is the outstanding debt that is transferred to another lender to lower the applicable rate of interest. Most of the financial institutions offer the facility of a balance transfer. So, if a particular borrower meets the minimum eligibility, home loan may be transferred for better terms.

Benefits of home loan balance transfer

1.      Lower EMI and interest rate

The main reason for home loan balance transfer is to avail a lower interest rate offered by another lender. Consequently, the EMI outgo will also be less, reducing the overall financial burden in connection to the home loan.

2.      Better terms

Financial institutions have different terms and conditions for home loan repayment. So, if there is another lender who is offering better terms and conditions than the existing lender, it will be favourable to opt for a home loan balance transfer.

3.      Pre-approved offers

Lenders, at times, offer various schemes and discounts to allure borrowers avail loans from them. Such a window of discount is one of the main reasons for choosing home loan balance transfer and enjoying the benefits it offers.

Leading financial institutions extend pre-approved offers to existing customers, which make the process of availing loan much simpler. Mostly, such offer includes various financial products, including home loans and loans against property. Check your pre-approved offer online by providing few basic details such as name and contact number.

4.      Top-up loans

Apart from a lower rate of interest and better terms of repayment, balance transfer offers other benefits as well. For instance, a top up loan may be offered by lenders, which is an option for additional funding over and above the transferred loan outstanding. These advances do not come with end-use restrictions, allowing borrowers to utilise the sum according to their unique requirements.

5.      Charges

There are a host of associated charges concerning home loans such as prepayment or foreclosure charges. Such charges are levied if the amount is repaid before the tenure. Before opting for the home loan transfer, the cost-benefit analysis of these charges should be done. Even after considering the charges, transfer of loan to another lender looks like an attractive option; then it may be the right step to take.

It should, however, be noted that home loan balance transfer can yield advantage only if a borrower meets certain criteria. It is important to undertake a cost-benefit analysis before opting for such transfer to another lender.

If better terms of the home loan have been identified with another lender, then the borrower can request the existing lender to revise the rate of interest based on credit score and track record of repayment. It is possible that the existing lender may renegotiate on the terms and offer a lower rate of interest. This is something a borrower needs to know about home balance transfer among other essential factors already mentioned. Make sure to decide on such a refinancing option only after considering all other aspects of the financing facility.

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