Since the year 2020, house loan interest rates in India have been above 7% p.a. The higher the interest rate, the higher is the EMI. In this scenario, even a 1.5% reduction in the interest rate can imply major savings.
Is there any facility to help you achieve this? Yes. That’s a home loan balance transfer. Read on to know more about this amazing facility.
What is Home Loan Balance Transfer?
This is a feature in which you transfer your outstanding home loan balance to another lender to get a lower rate of interest.
After this transfer takes place, the new lender clears the unpaid loan balance to your previous lender. Therefore, your previous home loan account is closed.
At the same time, you start your new house loan account with the new lender and pay a relatively lower rate of interest.
When Should You Transfer Home Loan?
Reduce interest burden
As already discussed, you should transfer your home loan balance primarily when you get a lender offering a lower interest rate. This reduces your interest burden and the EMI payable. So, you can repay your loan to become debt-free faster.
Change the type of interest rate
You may also transfer your home loan to switch from, for instance, fixed to floating interest rates. A fixed rate remains unchanged throughout the tenure. A floating interest rate isn’t fixed and therefore, allows you to access the best rates. Moreover, no prepayment charges apply for a loan with floating interest rates.
Need a longer tenure
Sometimes, you cannot repay an existing loan within a short tenure. So, again, with a balance transfer facility, you can choose a loan that comes with a longer tenure, for instance, up to 30 years. Then you can pay lower EMIs spread across the long tenure.
Get more benefits
Make sure to choose a lender offering home loan balance transfer from all NBFCs, HFCs and banks. Also, look for other benefits like:
- Additional top-up loans available as per your repayment track record
- Top-up loans available at the same rate as balance transfer
- Legal report waiver offered in case of balance transfer from leading NBFCs and banks
- Digitalised process for faster turn-around time and customer convenience
- Tailor-made loans available with minimal documentation
- Home loans available for both salaried and self-employed individuals
Want better customer service
Are you not satisfied with the customer services of your existing lender? These may include frequent changes in the loan policy, too much delay in updating personal details, lack of prompt services at the service desk, etc. Again, in that case, you can switch to a better lender. For that, consider the one of the top banks for home loans in India.
Based on your requirements, go for the balance transfer facility at the right time. Before that, make sure to learn about any applicable home loan transfer charges. After the loan is transferred, use the online EMI calculator on the bank’s website to check the new instalment amount and try to pay them regularly on time.