If you have already availed a home loan and facing financial difficulties in paying the loan EMIs, you can opt for a home loan transfer facility. This feature enables you to transfer your loan balance to another financial institution that is offering lower interest rates and additional benefits.
Things to keep in mind before opting for a housing loan balance transfer
If you have an existing home loan, you should be on the lookout for other financial institutions offering comparatively lower interest rates on home loans. As per the guidelines of the Reserve Bank of India, interest rates on home loans are subject to be updated every 3 to 6 months.
It is advised to opt for a balance transfer to another financial institution where the interest rates are comparatively lower.
However, there are also other factors to consider besides lower interest rates while opting for a home loan balance transfer –
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The credibility of your new lender
Before transferring your home loan balance, it is mandatory to check the credibility of your new lending organization. There are several financial institutions and reputed NBFCs in India providing competitive interest rates to borrowers and have developed a certain reputation for their services.
So, you should not select a lender based only on the offered interest rates. It is mandatory to check reviews and credibility testimonials on various platforms before choosing your desired financial institution for a home loan transfer.
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The tenor of your existing home loan
Financial experts advise borrowers to transfer the balance during the first half of the loan tenor. The interest component of your home loan EMIs is dealt with in the early stages of your tenor. Hence, transferring the home loan balance early in your tenor will help you save on interest.
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Refinancing expenses
As a borrower, when you are opting for a home loan balance transfer, you should be aware of the charges, such as application costs, processing fees, part-prepayment expenses, etc.
Hence, you should always check if the total cost of refinancing the loan is worth the home loan balance transfer. You can take the assistance of an online balance transfer calculator to estimate the charges beforehand; ensure that these additional expenses are not more than the amount of payable interest saved by availing the balance transfer.
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Consider the type of interest
While availing a home loan balance transfer facility of your desired financial institution, you can choose to change the
type of home loan rate. For example, if you opted for a fixed interest rate on your existing home loan, you can convert it into a floating interest rate while transferring your loan balance to the new lender and vice-versa.
It is advised to opt for this change only if you have adept knowledge of the change in market rates in India. So, it is important for borrowers to know how to choose between floating and fixed interest rates.
After transferring your home loan balance, you can also avail of top-up loans if you are in need of funds. Financial institutions and reputed HFCs offer Top-Up Loans of up to Rs.50 lakh without any additional documentation at affordable interest rates. Several companies also bring forth already-approved offers that help in availing loans quick and simplified. One should always compare different lenders before opting for a housing loan in India.
These are the factors to consider before you go through the various steps to apply for a home loan balance transfer. The home loan transfer facility not only helps borrowers to lessen their financial troubles but also to instil competition among lenders in offering affordable interest rates.
