A home loan balance transfer is the facility, which allows you to shift your current amount of unpaid home loan from a particular lender to a different HFC. Refinancing a home loan is the perfect option if you find a different lender charging lower interest on loans mid-way through your housing loan repayment.
A home loan balance transfer is one reason why borrowers must never give up looking for best home loan deals, even after acquiring the funds. You can research and compare the best deals to simplify your home loan repayment.
Charges related to the refinancing of a housing loan
Before going ahead with a balance transfer option, a borrower must consider the various charges involved in it. This expense is likely to vary from one lender to another. You need to go through the refinancing terms of the concerned financial institution thoroughly before coming to a decision.
Some lending institutions also provide helpful features like home loan balance transfer calculator so that you get a clear idea about the relevant expenses.You will have to fill up the following details to calculate your refinance benefit-
- Name of your existing home loan financing company
- Location of your property
- Starting month and year of home loan repayment
- Total sanctioned amount as home loan
- Present repayment tenor of your housing loan
- Current rate of interest on this home loan
- Rate of interest you will have to pay after home loan refinance.
Based on these inputs, the calculator estimates the total amount you save, new loan amount you are eligible for, as well as the amount of top up loan you are eligible for. This helps you figure out why you should choose a housing loan balance transfer.
Find out the penalty your current lender will be charging for refinancing your loan. A processing fee is also charged from the borrower by the new lending institution. You need to decide whether refinancing is still a profitable move after bearing all of these additional charges.
Benefits you can enjoy through home loan balance transfer
It is better to estimate the stakes, understand the benefits and analyse your expenses before refinancing a home loan. Given below are some benefits, which you can expect from a housing loan balance transfer:
- Lower interest rates or EMIs
This is the most common yet most crucial reason behind loan refinancing. Borrowers choose to switch lenders when they find a more affordable home loan interest rate. It not only brings down the EMIs substantially but also reduces the cost of a loan.
- Easier repayment terms
Different HFCs have different sets of terms and conditions for home loan repayment. If the repayment terms of your existing lender seem too stringent to you, you can look to other lending institutions. These companies may offer more reasonable terms, which should simplify servicing your housing loan EMI.Tips for Home Loan Refinancing Process
- Top-up loan offers
When you opt for home loan refinancing, some financial companies also provide exclusive top up loan offers. Top up loans are additional credits on offer from your lender, which is above and beyond the home loan quantum. Often, such funds are needed to finance the ancillary expenses of buying a new home.
Leading financial institutions provide pre-approved offers to ensure a convenient and accelerated loan application process as well. These offers are available on a range of secured loans, including loan against property, home loans and more. You can check your pre-approved offers by entering your full name and phone number.
Thus, a home loan balance transfer is beneficial if you plan it wisely and tactfully. After reading the above points, it is clear that you should choose the refinancing option only when you know everything about home loan balance transfer in proper details.
Refinancing a home loan is usually more profitable during the initial years of repayment. This would help the borrower maximise interest savings. Switching at a later stage, on the other hand, will limit interest savings since a major portion of interest on the home loan is cleared during the first few years of repayment.
Being cautious is also the key to a home loan balance transfer. You should opt for it only when all the factors like interest rate, foreclosure charges, penalty, processing fee, repayment terms, etc. are in your favor. You must switch or refinance your home loan when you are sure to benefit from it.
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