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13 APRIL, 2022
A home loan balance transfer is a convenient way to reduce interest rates. There are several benefits of opting for a balance transfer. Getting a reduced interest rate on home loans is one of the most common benefits to help ease the monthly EMI burden. But what if you want to transfer your home loan multiple times? Is it possible? If it is at all possible, let’s find out how.
What exactly is a home loan transfer?
The home loan balance transfer facility allows home loan borrowers to switch their loan to another lender before their loan tenure ends.
When you opt for a balance transfer, the new lender considers the application as a fresh home loan application. Once approved, the new lender repays your outstanding loan amount to the existing lender. Now, your loan is closed with the existing lender, and you are asked to repay the remaining EMIs to the new lender at their interest rates.
As mentioned earlier, the most significant benefit of switching your loan is getting a lower interest rate.
For example, suppose you have availed a home loan of Rs. 25 lakh at a 7% interest rate for 20 years. The approximate total interest due for payment will be Rs. 21.5 lakh. However, if a different lender offers a reduced interest rate of say 6%, your total interest amount would be almost Rs. 18 lakh, saving an amount of Rs. 3.5 lakh.
However, you can also enjoy the following benefits by refinancing your loan -
How many times can you transfer the loan?
There are no restrictions on the number of times you can transfer the loan. Nor can lenders object if you want to transfer your home loan more than once. However, it might not be a wise decision to transfer your home loan more than once due to the following factors -
Considering the amount of money you can save with one switch, a home loan balance transfer seems an appealing option. However, it is prudent to do a cost-benefit analysis and ensure that you have a significant amount to save by the transfer. Transferring multiple times should not cost you more than you plan to save.
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