Today, the financial institutions in India offer a variety of innovative and customised services to their home loan customers. One such service is the home loan balance transfer. Read on to know more about it.
Home loan balance transfer is a facility offered by the lending organisations that allows the borrowers to transfer their home loan from one lender to the other. If you have an outstanding home loan with a specific borrower and you are not happy with the quality of their services or if you feel that they are charging a higher interest as compared to other, you need not be stuck with the same lender throughout the loan tenure. Instead, you can opt for a home loan balance transfer, which is also known as refinancing.
This arrangement helps you avoid paying a higher interest as listed by one home lender and migrate and move the loan to a different lender who is offering the loan at lower interest rate. The transfer of a home loan is like porting your mobile number to a different network service provider.
So, why should you consider home loan balance transfer? It is a known fact that home loans involve a significant amount of money and when the interest rate is high, the EMI is high. This can sometimes make it hard for you to manage the repayment, especially if you have other liabilities. And,home loan balance transfer gives you the benefit of repaying the outstanding amount at a lower interest. This simple move can help save a significant amount in the long-run.
Benefits of home loan balance transfer
- When you transfer your home loan to a new lender, you can avail the benefit of lowering your monthly EMI (Equated Monthly Instalment) because of the interest rate revision. Even a reduction of 0.5% in the interest rate can lead to valuable savings in the long-run.
- In some cases, depending on the lender to which you transfer the loan to, your home loan eligibility may increase as the parameter for calculation varies from lender to lender.
- When you apply for a home loan balance transfer, you can become eligible for a top-up home loan. You can avail this amount for home renovation or move to a bigger and better home.
- Another critical advantage of transferring your home loan to a new lender is that you can get better services and support from them. For example, the lender may have lower prepayment fees than your previous lender.
- Lastly, if you want to increase or decrease your loan tenure, then you can do so while you transfer the loan to a new lender and repay the amount as per the revised structure and schedule.
Process to apply for home loan balance transfer
Now that you are aware of the home loan balance transfer benefits, it would help to know the process involved for the transfer.
- Visit the concerned (new) lender’s website or office
- Read about all the terms and conditions for the transfer, including the process fee, and interest rate
- If you are happy with the terms, apply for the balance transfer
- Fill the necessary form and comply with the KYC requirements
- Obtain the documents required for the transfer from the old lender and get a consent letter and the loan statement
- Submit the documents and application form to the new lender for reviewing
- After reviewing your application, the new lender may provide you loan offer outlining all the details
- If you are happy the terms and conditions, pay the necessary fees (as applicable) and wait for the approval
- Once you receive the approval, the new lender will pay off the balance due to the old lender and your old loan account will be closed
- You can now start repaying the amount to the new lender
Home loan balance transfer is a great way to reduce the repayment burden. Make sure that you understand the terms and conditions and make the most of it.