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09 DECEMBER, 2021
There are high chances of home loan interest rates fluctuating at some point over the tenure. You could have availed the loan at a higher interest rate, which become low a few years. Therefore, while the new borrowers are paying a lesser EMI, you are stuck with higher interest rates. This could be frustrating to know that you are paying much more than you should. But thankfully, you have a solution. You can transfer your housing loan from one lender to another with a home loan balance transfer facility.
What Is a Home Loan Balance Transfer Facility?
A home loan balance transfer is a facility through which you can switch your housing loan from one lender to another. Transferring your loan can help you get lower interest rates and better services. When your balance transfer application is approved, the new lender repays your outstanding loan amount to the existing lender. Now, you can continue paying the remaining loan EMI to the new lender at their interest rates.
While balance transfer looks like the best opportunity to save money, there are certain things that you must consider before transferring your home loan.
Things to Consider While Transferring Your Loan
While you transfer the loan, you might have to pay the transfer cost, administrative charges and processing fee to the new lender. The transfer cost should not outweigh the amount you would save by opting for a home loan refinance. You must do a cost benefit analysis to ensure that your savings from the transfer are more than home loan charges.
The interest component of your home loan repayment amount is higher in the initial years of your tenure. Therefore, if you transfer your home loan for a lower interest rate, you must transfer it at the beginning of the tenure. You must factor in your remaining tenure when you apply for a home loan balance transfer.
As your transfer application is considered a fresh loan, you have to undergo all the application processes from scratch. This can take up a significant amount of time and effort. Therefore, before you transfer your loan, negotiate the interest rates with your existing lender. You must transfer your loan only when they refuse to negotiate the interest rates.
To transfer your loan, you must have a high credit score. The new lender would consider your credit score and assess your home loan eligibility. If you do not meet the eligibility, you will not be able to switch your home loan. Therefore, check your credit score before applying for a transfer.
A home loan balance transfer can help you get the best home loan interest rates. Moreover, it can also help you get other facilities like a top-up loan and overdraft facility. However, consider these 4 points and use a home loan balance transfer calculator to make the most of the balance transfer facility.
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