A home loan is a significant financial obligation that has a long tenor of more than one or two decades. People who are stuck to an expensive agreement may experience financial hardship when the repayment tenor extends over a long period of time.
Things to consider before opting for a house loan balance transfer
Existing home loan borrowers looking for a balance transfer must go through the mentioned pointers to make a sound decision-
1.Knowing the overall interest savings
For instance, if the interest rate on a mortgage loan is greater than those in effect at the time, choosing a house loan balance transfer can prove to be a wise choice. Continue reading to know the things to remember while opting for home loan balance transfer, Borrowers opt for a balance transfer facility in order to reduce overall interest costs. Because a balance transfer facility allows borrowing at a lower rate, it is important to evaluate the actual savings due to the lower interest rate.
Before submitting a balance transfer application, borrowers can use a home loan balance transfer calculator to estimate their savings. They will also be able to find the most economical balance transfer option by doing this and make an informed decision accordingly.
2.Renegotiating the lending terms
Balance transfers involve a number of procedures and the imposition of additional fees. Therefore, it is important to discuss and negotiate with the new lender in order to come to an agreement on rates and other parameters.
3.Selecting the right home loan tenor
Borrowers can choose to either shorten the tenor to complete repayment earlier than planned for additional interest savings or extend the tenor to lower the EMIs that must be paid. However, one should also keep in mind that the repayment tenor also affects the chargeable interest rate.
4.Considering timing of the balance transfer
When transferring the balance of a home loan, it is also crucial to consider the timing of the balance transfer. Experts advise to opt for a loan balance transfer in the first years of repayment only, rather than delaying the same because EMIs at the beginning of the tenor make up the majority of the interest component of the overall loan debt. As a result, the potential for interest payment savings grows.
5.Knowing top-up loan facility
Several lenders offer top-up loans as a key element for balance transfers of outstanding home loans. The advance has no restrictions on its final use, so borrowers can easily take care of their other financial demands.
As a top-up to a home loan, some lenders offer funds up to Rs. 50 lakh, making it simple to pay for large-ticket items. Further, one important thing that individuals should know about top up loans, is that it does not demand additional documentation.
6.Calculating applicable charges
If you want to transfer your home loan, you should be aware of the fees associated the facility as you have to pay these charges to the old and new lenders for loan application and foreclosure, respectively. It is crucial that you take these fees into consideration when calculating the overall savings from your loan transfer.
Here is everything you need to know about house loan balance transfer facility. In order to make an informed choice, prospective borrowers must analyse all relevant factors because obtaining a home loan is a is a long-term financial commitment.
Further, several financial institutions extend pre-approved offers on secured loans, such as home loan and LAP which expedite the overall application and disbursal procedure. Existing customers can check their pre-approved offers by entering few details in the lender’s portal.
Although a home loan balance transfer can save you a lot of money, you must make sure to repay the EMIs on time to enjoy a hassle-free borrowing experience.
