The home loan interest rate has fallen to its lowest level in many decades. If you’re still paying the home loan EMIs at the old rate, it’s time to transfer your home loan balance.
What is a Home loan balance transfer? How does it benefit you?
Transferring your home loan balance from one bank is called a Home loan balance transfer. This allows you to get a better interest rate and terms.
High-interest rates can directly affect your finances and could be a hindrance to your financial growth. It can also be stressful to remain in debt for too long. Foreclosing your home loan before the term ends can help you save money. It can be difficult to foreclose a large-ticket loan. However, a Home Loan balance transfer may be the solution you need.
Balance Transfer: How does it work?
A loan balance transfer transfers the remaining loan amount from your home loan to a new lender. The new lender will provide you with the money to close your existing loan.
The borrower must submit an application to his current lender asking for a balance transfer. Then, he will need to apply to a new lender. If the lender approves the taking over the existing home loan, the lender will pay the remaining amount to the lender and open a loan account for the same amount.
After the lender has received the outstanding amount, the lender must release the property documents. They also need to issue a no-due certificate.
All of these documents must be sent to the new lender. The borrower will have to pay the remaining EMIs at the lender’s discretion.
Home Loan Balance Transfer Benefits:
Lowers the Interest Rate, and thus the EMI
The lower interest rate is one of the main reasons to choose a home loan balance transfer. If you’re paying higher interest on your loan than other lenders, a balance transfer can work in your favor. It allows you to switch to lower rates with a different lender. This will reduce your monthly EMI, which can help you save a lot of money.
Get better terms for your loan
Different lenders offer different terms. If you have taken out a loan with terms that aren’t in your favor, you can transfer your loan to another lender offering the same loan at your preferred terms.
The maximum amount for a top-up loan:
The home loan balance transfer comes with an additional benefit, the top-up loan option. You can get an additional amount in addition to your outstanding balance by applying for a balance transfer.
Here are some things you should do before you transfer your balance.
- Make sure that the remaining payment period does not exceed five years
- Ensure that you are current on EMI payments.
- Make sure you have all property-specific documentation.
A home loan balance transfer can be a great option to lower your EMI/debt. You can also reduce your interest rate, get an additional loan, receive favorable terms, and get customized offers.