Home Loan Balance Transfer - Make Borrowers Happy

Posted by Arwind Sharma on June 6th, 2018

Mr. Ram Pukaar Prasad Yadav, a school teacher, based in Patna, Bihar had purchased a home on a Home Loan from one of the reputed banks 2 years before. He was happy that he was living in his own home and repaying the Home Loan EMIs on time.

Things turned bad when he discovered that a similar amount of Housing Loan was available with a leading non-banking finance company (NBFC) at a lower rate. He was miffed as he was paying a higher interest rate which was affecting his monthly budget.

He was aware of the Home Loan balance transfer facility via which one can transfer the outstanding amount, enjoy lower rates, and better customer services. He wanted to apply for it and bring down his Home Loan EMI.

If you are also stuck in a similar situation and willing to avail the Home Loan balance transfer facility, you should consider some factors before going for it.

Consider ‘these’ Home Loan Balance Transfer Factors

Apart from the lower interest rate and customer service, it is also vital to check other factors while considering Home Loan balance transfer:

1. Interest Basis Points – The points are nothing but differences in Home Loan interest rates or the fraction by which they change. These points remains high for some lenders because the rates fluctuate. Thus, always choose a lender offering lower Home Loan rates as it will confirm payment reduced Home Loan EMIs.

2. Interest Rate Systems – Interest rate systems are the base over which interest rates work. Some lenders offer floating while some provide fixed ones. Floating rates are higher as they are impacted by market conditions. Thus, if you are seeking to save on Home Loan EMIs, ensure to opt for lenders offering fixed interest rates.

3. The Value of your Home – Based on the prevailing scenario in the market, the value of your home can go up and down. However, while opting for the balance transfer facility, ensure that your home has a higher monetary value. It means paying lower EMIs. Also, if your home value is lower, it will be tough to get your balance transfer application processed. Thus, ensure that your balance transfer move is timed perfectly so that you can enjoy its purpose – to lower your Home Loan EMIs.

4. The Costs in Comparison to the Benefits – Before you go ahead and submit your Home Loan balance transfer application, it will good to analyze all costs and benefits. You may come across many charges such as application, processing, taxes and even legal charges. Also, while doing the balance transfer, ensure that you are able to pocket savings. If you think that the cost of the balance transfer option is higher than what you will save, stick to your old lender. Yes, sometimes many people apply for the balance transfer without determining if it’s beneficial for them or not. Thus, it’s important to know your exact benefits before applying.

5. What About the Top-up Loan? – Some lenders offer you the top-up loan facility when you apply for the Home Loan balance transfer up to the tune of Rs.50 lakh. The top-up loan comes at a lower rate and a longer tenor to help you cover other needs.

The Bottom Line

Now that you are aware of the considerations to make before applying for the Housing Loan balance transfer, it puts you in a good position to analyze things at your end. Assess your needs and compare various deals online before applying!