How to Reduce Your EMIs with a Home Loan Balance Transfer
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How to Reduce Your EMIs with a Home Loan Balance Transfer

  • Highlights

  • Look for lowered home loan interest rates

  • Do a balance transfer in the beginning of your repayment

  • Read the fine print to avoid hidden fees and charges

  • Estimate the cost of balance transfer vs your savings

As all interest rates tend to do, home loan interest rates also fluctuate over time. Since home loans are typically long-term loans, it is entirely possible that the interest rates will fall during your repayment tenor or lenders will run seasonal offers for competitively low rates for home loans. You can avail of the new rates—and the subsequently lowered EMIs—through a home loan balance transfer. Here’s how to make it work.

Keep an eye on new offers and changing interest rates

Whether you’re on a fixed or fluctuating interest home loan, be mindful of the changes in interest rates, since a balance transfer could help you avail of lower interest rates. What’s more, many financial institutions also offer seasonal deals on interest rates, provided you apply within a certain period of time. It is important that you keep an eye out for changes in home loan interest rates, so that you know what is on offer and when it is a good time to consider making a switch.

Get your documents in order

Remember that applying for a home loan balance transfer is almost exactly the same as applying for a new loan. This will include proof of identity and proof of residence, as well as three months’ salary slips, six months’ bank statements and two years’ tax returns, apart from property papers. Essentially, you will have to present all the documents that were required by your previous financial institution. Additionally, you’ll need to get an NOC from your existing lender.

Calculate your new EMI to see if it fits your budget

It is important to remember that while you’re considering transferring your loan from one institution to another in favour of lower interest rates, it may not always be financially prudent to do so. Use a home loan balance transfer calculator to calculate your new EMI in comparison to the one you are currently paying. If the difference is significant, it is definitely worth considering the switch. However, if the difference in repayments is small, you will have to take into consideration the processing charges and fees involved in transferring the loan, before deciding whether the switch is worth it.

How Home Loan Balance Transfer Helps you Save Money

Find out if your current lender is willing to match the rate

Often times, when one financial institution offers a competitive interest rate, many others follow suit with their own lowered rates of interest. Before you make the switch, approach your existing lender and see whether they are open to matching the competitor’s interest rate. You may find that they’re willing to offer you better interest rates as a way of keeping you on as a customer.

Estimate the cost of doing a balance transfer compared to what you save

Making a home loan balance transfer is essentially like applying for a new home loan—it requires some paperwork, some time, and most importantly, a little money in the form of processing fees and other charges. In some cases—especially if you’re taking on the loan at the beginning of your tenor—the reduced EMI is worth all this in the long-term. Plus, some lenders may offer you additional benefits on making the switch. For example, doing a Home Loan Balance Transfer with Bajaj Finserv gets you lower interest along with an affordable top-up loan and a 3 EMI holiday to help you sort out your finances with ease. So, weigh your savings and advantages carefully before deciding to do the transfer.

With these 5 considerations, you can make an informed decision about doing a home loan balance transfer and reduce your home loan EMIs.

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Steps to Apply for Home Loan Balance Transfer