A home loan balance transfer involves transferring the outstanding balance on a home loan to another lender, usually to get access to a lower rate of interest. After that, if you can submit the documents required for home loan transfer, your new lender pays the outstanding balance to your previous lender. So, the previous account gets closed. Alongside, you open a fresh account with the new lender.
The year 2022 can be a good time to opt for a home loan balance transfer if you’ve been paying high interest or dissatisfied with the services. That’s because interest rates have already declined in 2020-2021. So, the first half of FY2021 witnessed a 42% increase in borrowers trying loan transfers. Here are the benefits of doing so.
Reduce interest burden
The most common reason to transfer the balance of an existing home loan is to reduce the interest burden. So, you need to transfer it to a lender offering a lower interest rate. Then you can afford the EMIs better and repay the new loan more conveniently. Ensure to arrange the home loan for salaried/self-employed as suitable to your case before applying for a loan transfer.
Change the type of interest rate
Sometimes, you can transfer your home loan to change the type of interest rate applicable for it. For example, you may switch from fixed to floating interest rates or part-fixed and part-floating rates. A fixed rate is unchanged throughout the repayment tenure. However, a floating rate, by not being fixed, gives you access to the most attractive interest rates. Plus no prepayment charges are levied if the loan has a floating rate.
Enjoy a longer tenure
You may find it difficult to repay a loan over a short tenure. Here again, a balance transfer helps. You simply need to apply for a new loan with a longer tenure, say, up to 25 years. This allows you to pay reduced EMIs spread over a long duration. Ensure to check the necessary “home loan ke liye documents” before applying.
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Get multiple repayment options
If you want flexible repayment options but couldn’t get them from your existing lender, you can choose a lending bank offering the following options besides EMIs:
- Step-up repayment facility that lets you pay more EMIs as your income increases.
- A flexible loan instalment plan for applicants whose income may decrease over a few years or those approaching retirement.
Receive better customer service
Are you dissatisfied with the customer services of your current lender? You may be bothered by a lack of quick services at the service desk, extreme delay in updating personal details, frequent changes in policy, etc. In this case also, you can go for a better lender and choose a reputed bank for home loans in India.
All you need to do is ensure to meet the eligibility criteria and prepare all the documents required for a home loan transfer before applying for this facility. Then remain stress-free with a lightened interest burden and enjoy better loan services!
Also, Read Impact Of EMI Default On CIBIL