A home loan balance transfer is a facility where you transfer your unpaid home loan balance to a new lender to lower your monthly EMIs. It is opted by the home loan borrowers whenever they find the other lenders are offering a lower rate of interest. It is one of the great options that help you avail a lower interest rate and also gives you the flexibility to adjust existing loan tenure and smaller loan EMIs. One should opt for this option only after doing thorough research about the benefit which you would be getting while doing a home loan balance transfer.
Why should you opt for a home loan balance transfer?
With a home loan balance transfer, one can avail these benefits which they might not get from their existing loan.
1) Lower your interest rates and EMIs
One of the most common reasons why do people opt for a home loan balance transfer. A borrower could consider this option when you find that another lender is offering a lower rate of interest than what your existing lender is charging. The lower price of investment means you will be repaying lower EMIs as well and thus reducing your monthly burden.
2) Better repayment terms
Suppose your monthly income gets increased, and you are planning to extend your existing loan tenure and lowering your EMIs. Conversely, you might want to pay higher EMIs by reducing the mandate and thus reducing your total interest outgo. Paying higher EMIs and lowering your loan tenure would help you to be debt free quickly.
3) You could get a lower rate of interest if you have a good repayment record
While doing a balance transfer, you can negotiate the terms and conditions of your home loan by showing your excellent track record of payments, your credit score, etc. It may help you in getting a lower rate of interest or other benefits that your current lender is not offering.
4) Foreclosure and prepayment charges
These are the two essential charges that are associated with your home loan. Most of the lenders usually charge if you if your foreclose your mortgage or prepay it before the completion of the loan tenure. So, you need to check before you balance transfer your existing mortgage.
5) Avail a top up on your balance transfer
If you want to meet some additional requirements like paying for your ongoing debts or use it for home renovation, you can opt for a balance transfer on your loan to avail additional funds on your actual loan amount.
A facility of a balance transfer is indeed a useful tool for a home loan borrower if you want to lower your monthly home loan EMIs and avail a lower rate of interest. You need to pay attention to several factors such as processing fees, loan processing time, flexibility in repayment options to avail maximum benefits. So, consider these factors when you plan for a balance transfer on your existing home loan with a new lender.
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