A home loan balance transfer is when you transfer your unpaid home loan amount to another lender to lower your monthly EMIs. This is done when the borrowers find a lower interest rate being offered by a new lender.
How can a home loan balance transfer benefit you
A home loan balance transfer can be a profitable deal if you meet certain requirements. Most experts suggest a cost-benefit analysis before transferring your home loan to another lender.
Here’s how you can make the best use of a home loan balance transfer:
1. Lower your interest rates and EMIs
The most common reason for any home loan balance transfer is the lower interest rate. It can definitely be considered if a new lender offers an interest rate lower than your existing lender. A lower interest rate will result in lower home loan EMIs, thus, reducing your monthly burden.
2. Better repayment terms
Each lender has different terms and conditions attached to a home loan. A balance transfer will be a good choice if you get a better deal regarding the home loan repayment.
3. Foreclosure and prepayment charges
These are the two most essential charges associated with any home loan. Lenders usually charge when you foreclose or prepay your home loan before your decided loan tenor. This is an important factor while doing the cost-benefit analysis for your home loan balance transfer.
Additional Read: Everything you need to know about Home Loan balance transfer
4. Top-up loans
Home loan balance transfer comes with a few direct and indirect benefits. Lower interest rates, lower EMIs, and better repayment terms are a few benefits that directly reflect the decreased loan cost. However, lenders offer a few indirect benefits if you transfer your home loan to them.
Top-up loan is a facility that provides additional home loan amounts if you need extra money. It comes as an affordable and faster solution compared to other lending options.
5. Preapproved offers
Lenders come up with schemes and discounts to attract borrowers from time to time. As a borrower, you can use the right window to transfer your home loan.
A home loan balance transfer is advisable in the initial years of borrowing as it can help you get the benefit of a lower interest rate for a more extended period. It is an option which most of the lenders offer these days.
However, be very cautious while transferring your home loan.
Remember, you shouldn’t transfer your home loan every time you come across a lower interest rate. Do a cost-benefit analysis and make a smart move.
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