A home loan balance transfer is essentially a transfer of your unpaid home loan amount to another lender. This transfer is done when a lender offers lower EMIs as compared to your existing lender. In this article, we will discuss the benefits of home loan transfer and understand why you should be opting for it.
What are the benefits of a home loan transfer?
Some of the benefits of a home loan balance transfer which makes it lucrative are:
- Lowering of interest rates and EMIs:
Perhaps the first thing which would have attracted you to make a home loan transfer is the lower interest rates and/or the affordable EMIs. A lesser interest rate will help reduce your monthly payment burden.
- Better repayment terms:
The repayment terms differ from lender-to-lender. With a home loan transfer, you always get an option to opt for better repayment terms than your current lender.
- Foreclosure and prepayment charges:
These are the two most essential charges generally associated with a home loan balance transfer. Most lenders charge you a minimal fee before your loan tenure is decided. This is called the foreclosure or a prepayment charge. This factor plays a crucial role while doing the cost-benefit analysis for the transfer.
- Pre-approved offers:
Lenders tend to come up with lucrative schemes and discounts which are designed to take the burden of EMI off your shoulders. Being a borrower, you can scan through all the possible offers that the lender offers and select the one which suits you the best.
How can a home loan balance transfer benefit you?
Along with the easy EMIs and lower interest rate, a home loan transfer helps to ease the outflow of your income significantly. It helps you deal with your loan so that you could pay out less and save the remaining amount.
It also helps to plan your savings and investments so that your financial chart doesn’t go for a toss. Generally, experts advice to make a cost-benefit analysis before you zero down on a lender to make the home loan transfer.
On a final note:
If you do decide to make a home loan balance transfer, it is better if you do it in the initial years of your home loan tenure. Opting for it early will offer the benefits of a lower interest rate for a longer duration.