Benefits of opting for home loan balance transfer.

Posted by Anurag Mishra on March 30th, 2017

The amount of home loan involves significantly huge amount, the interest rate at which the home loan is availed is a matter of concern when you take a home loan. Various banks and non banking financial institutions have been providing home loans across India at a lower interest rate which ranges between 9-10%. Even the processing fee for the home loans is minimal which 1-2 % of the loan amount is. Hence, the interest rate is the deciding factor on how affordable the loan will be.

As the amount involved in the home loans is huge the tenure of the repayment is generally more. You can ask the bank which has offered you the loan for a lower interest rate or you can go for home loan balance transfer of the existing home loan where you will shift the home loans to a lesser interest rate. Even a 0.50 % of reduction in the reduction rate can help you save lot of money which can be utilized for other purposes.

What is home loan balance transfer?

Home loan balance transfer is the process which allows you to avail the benefit of lower interest rate offered by the lender. When you have taken a loan you can shift the remaining amount to a lender which is offering comparatively lesser interest rate. This is also known as refinancing. This feature allows the person to avoid paying more for a loan with a higher interest rate and migrate to a lower interest structure offered by another lender.

What are the features of balance transfer?

  • You can transfer the remaining balance of your existing home loan to the other bank or lending institution.
  • The fee charged for balance transfer is 1 % of the loan transferred that is to be paid to the new lender for the amount of the home to be paid.
  • The home loan balance transfer application is treated same as the new application by the new lending institution.
  • This feature of refinancing can be availed only after a certain pre-determined period as mentioned on the original papers of the home loans.
  •  Once the transfer is done the borrower owes the new loan amount and the applicable charges to the new lender. Generally people go for home loan balance transfer if the bank they have taken loan from is not offering them a lower interest rate instead of paying the EMIs on time. So they negotiate and if the outcome is negative they opt for home loan balance transfer.

What are the reasons to apply for balance transfer?

The most important thing you can do is save money when you opt for balance transfer. The difference between the interest rates, the tenure for the repayment of the home loans and the remaining loan amount are the three important factors.

  • This will help you reduce the burden of the loan. By considerably reducing the EMI to be paid every month.
  • This reduces the amount of money which is to be paid as the interest on the home loans.
  • The person can simply avail for home loan balance transfer just to get attractive rates and other benefits being offered by the new lender.

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Anurag Mishra

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Anurag Mishra
Joined: December 13th, 2016
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