Taking a home loan from a financial institution means a long-term commitment. The borrower must consistently repay the loan monthly to avoid consequences, notably a low credit score.
However, this does not imply that the borrower must pay back the loan at the same bank. Fortunately, if another lender offers cheap interest rates, the applicant can transfer the same loan to them. This process is known as home loan balance transfer. While the idea might seem interesting, you should consider many factors before concluding. Depending on these factors, an applicant can decide the right time for a House loan balance transfer.
What Does Home Loan Balance Transfer Mean?
Existing home loan borrowers can shift their remaining loan balance to a new lender and pay reduced interest rates through a House loan balance transfer. Additionally, the transfer may help applicants obtain a longer payback period. Given how convenient it is for the borrowers, several banks and housing businesses offer this service. The best thing about this idea is that it allows you to repay loans at a low home loan interest rate in India or over a longer period without affecting your credit rating.
When To Opt For The Home Loan Transfer Facility?
The applicant must cross-compare the benefits of shifting from one bank to another before opting for this facility. Here are the factors that an applicant can consider before making a final decision.
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Low-interest rate:
Even if the other lender offers you a lower interest rate than the first, it is important to find out what fees are associated with moving the mortgage. For instance, it is preferable to continue making home loan repayments with the previous bank if the other lender offers interest 1% lower than the former lender but levies a huge transfer fee.
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High outstanding loan:
It is ideal to transfer the home loan in the initial months of loan repayment. As you pay the principal amount and the interest every month, the principal amount decreases, so the chance of getting good interest rates lowers. So, switch in the early months if you want a good home loan interest rate in India.
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Offers:
To attract customers’ attention, various banks make multiple offers. You can switch lenders if you discover that the other lender is providing better deals. However, if it is the opposite, paying the home loan in the same bank is the right decision.
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Approval:
The approval factor should also be examined. Check to see if the other lender has consented to pay the mortgage on your home. Before making a decision, it is best to verify with your lender because each lender has unique approval requirements. If the other lender does not agree to pay the loan at low rates, you can continue repaying in the same bank.
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Top-up loan:
The top-up loan facility is another advantage of using a bank’s home loan balance transfer. You can receive a top-up of up to 25%. In other words, you can get 25% of the outstanding amount for switching with this option. This sum can be used for a child’s education, home improvements, and other purposes.
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Customer service:
Since loan repayment takes time, paying a loan to a bank that provides the best customer service is essential. If the former bank does not give one, make a switch.
Conclusion
You can choose the ideal period for your home loan to be transferred by analysing the factors mentioned above. A house loan balance transfer can offer you a better and more affordable home loan interest rate in India. But you must consider these things to avoid losing out on other benefits at the expense of this facility.
