A Home Loan Balance Transfer allows one to transfer the existing home loan to another lender, usually for better interest rates, improved terms, or additional features. This forms a big financial move for reducing your monthly EMIs and cutting down on the total interest payable over the tenor of the loan. One might also get top-up loans and other value-added services with the new lender. Be it reducing the financial obligation or getting better terms, a Home Loan Balance Transfer may prove to be a strategic step towards home loan optimisation.
Home Loan Balance Transfer and its Benefits
A home loan balance transfer is essentially the process of transferring the remaining home loan amount to be paid by you to another lender willing to refinance the loan on more promising loan terms and conditions. In the majority of cases, the home loan balance transfer facility is opted for by individuals who are finding it difficult to afford their current EMIs and want to switch to a lower interest rate. However, some borrowers may choose to go for a balance transfer when they find another, more reliable lender who offers flexible repayment terms.
Yet another reason why many people choose to go for a home loan balance transfer is to benefit from the option of a top-up loan. A home loan top-up is an additional loan, which comes with a low interest rate and is extended for a long tenor. Further, the funds availed through a top-up loan can be used to meet housing-related expenses.
If you are considering opting for a home loan balance transfer, you should read about the home loan transfer procedure. Having all the information at your disposal will allow you to navigate the entire process easily and also negotiate for the best loan terms and conditions.
Home Loan Balance Transfer Process Explained
The home loan balance transfer process is straightforward. If you are considering transferring your loan to another lender, one of the first things you must do is assess the cost of transferring the loan. For instance, your current lender may charge a home loan balance transfer fee. So, all home loan applicants must make use of a home loan balance transfer calculator to ascertain the total cost of transferring funds. One should choose to go for a balance transfer only if the final cost of transferring funds is lower than the total savings that the borrower will make by opting for the balance transfer.
If you have found yourself a new lender willing to refinance the loan on the most beneficial loan terms and conditions, inform your current lender of your desire to transfer the remaining balance on your home loan. You will be able to apply for a home loan balance transfer once your current lender releases an NOC. Collect all the required documents and apply for a home loan balance transfer. The new lender you apply to will go through all the documents provided by you and verify them. They will accept your request for a balance transfer only if you meet all the qualifying criteria and pay the required fee. If you pass the document and property verification stages, your lender will extend you a home loan offer. Once you accept the offer, your new lender will pay off your current lender and the remaining balance on your home loan account will be transferred to your new lender. You will now need to pay loan home loan EMI to your current lender.
Final Words
A home loan balance transfer can be a very strategic financial move. In addition to better interest rates and reduced EMIs, it allows availing additional funds in the form of a top-up loan. Having a proper understanding of how the transfer is done and its costs will help one in optimising a home loan for better flexibility in its management.
