Home Loan Balance Transfer is the procedure of transferring your Home Loan from one loan provider to another at lower interest rates. Interest rates often change due to the changing market conditions.
When the interest rates decline, you can transfer your Home Loan to another bank or financial institution which offers a lower rate of interest.
In this system, your outstanding loan amount becomes the new loan amount in the second bank and you need to repay off the loan at the interest rate offered by them.
Benefits of Home Loan Balance Transfer
Transferring your Home Loan is an easy task, but it is important to make it beneficial for you. Let us have a look at some of the benefits of balance transfer facility:
The most important advantage in making a Home Loan balance transfer is saving money. Home Loan Balance Transfer is always opted for by an individual when the interest rates decline. To take advantage of the decreasing interest rates, you switch your Home Loan to another bank. It helps you to save money which can be used to pay a larger amount of EMI or make interest payments. This, in turn, will reduce your principal repayment as well as the loan tenor. You can also invest these savings in other options.
▪ Lower Interest Rates
The most common benefit of opting for a Home Loan Balance Transfer is the reduced interest rates. When the interest rate reduces, you can switch your loan to another bank. This will help you in lowering down your EMI and also make lower interest payments. It may also reduce the overall tenor of your Home Loan.
▪ Top Up Loan
There are many banks and financial institutions that offer a Top Up Loan when you transfer your Home Loan from one lender to another. You can use these top-up loans to pay off your debts, home extension or renovation, or for your child’s education expenses. Lenders provide such loans at a lower rate of interest. A top-up loan is available without any additional documentation and has the same loan tenor as your existing Home Loan.
▪ Customized Insurance Plans
Most banks and financial institutions offer customized insurance plans and policies along with balance transfer facility. You can choose the insurance plan that best suits your requirements and protects your family from unforeseen circumstances and incidents.
▪ No Prepayment and Foreclosure Charges
When you opt for Home Loan Balance Transfer, you can also enjoy the benefits of zero prepayment and foreclosure charges with some banks. This implies that you do not have to pay any additional charges when it comes to prepayment or foreclosure.
▪ Online Access
Some loan providers offer the online facility of balance transfer. You can apply for the balance transfer online as per your convenience. You can manage your Home Loan on the website whenever required.
▪ Other Benefits
It is important to have a good repayment record with your existing bank. When you transfer your Home Loan to another lender, you can negotiate the terms and conditions on the basis of your existing repayment record. It can help you to get much better interest rates on your new loan and better benefits in terms of loan costs and charges.
The Bottom Line
Purchasing a home is a dream for everyone. So, it is important that you are aware of all the features and benefits of the Balance Transfer before applying for a Home Loan or transferring your Home Loan. Make sure you collect all the loan-related documents and paperwork from your existing loan provider to transfer your Home Loan without any hassle.