Many housing loan borrowers who get better loan terms and a lower interest rate switch their current home loan to a different lender. A home loan balance transfer facility is a feasible choice for borrowers servicing existing house loans at a high rate of interest.
Continue reading this article to know what is the home loan balance transfer process and how to opt for this facility.
How to Opt for a Home Loan Balance Transfer?
Firstly, an individual needs to meet all the eligibility parameters set by the lending institution. This generally consists of repaying a certain amount of the loan in the form of EMIs. Further, he/she must not have any outstanding dues. Those who fulfil all these criteria can follow these simple steps to opt for a housing loan balance transfer:
Step 1: Opt for the balance transfer option from the preferred lending institution’s website.
Step 2: Write a letter to the current financial institution and get a NOC.
Step 3: Make sure to collect all the documents from your existing lender or check if they transfer them to the new lending institution.
Step 4: Then, you can start repaying the EMI amounts for a home loan according to the terms stated by the new lending institution.
What Are the Benefits of Opting for a Home Loan Balance Transfer Option?
Here are some of the beneficial aspects of applying for a home loan balance transfer facility:
- Low interest rates
Candidates choose a home loan balance transfer primarily because a new lender provides a better interest rate. Lower interest rates lead to reduced monthly payments and, as a result, lower overall repayment amounts.
- Part-prepayment facility
You can pay back a portion of the outstanding home loan principal using the part-prepayment option. By choosing this option, you can either shorten the repayment period or lower your monthly EMIs. This allows you to significantly reduce the amount of interest that is ultimately due.
- Top-up home loan
A top-up loan is useful in cases where you need extra money to renovate an existing asset or purchase a new home. This facility is provided by almost all financial institutions at a competitive interest rate over ongoing home loan.
- Flexible repayment tenor
People also opt for this facility if a new lender offers a flexible repayment tenor. Customers are free to choose between short and extended repayment terms per their financial capabilities.
That being said, one can use an online home loan balance transfer calculator to determine affordability while opting for a balance transfer. This customised tool is extended by most of financial institutions. Willing applicants have to enter the following details in order to determine the amount they will save by opting for a balance transfer:
- Outstanding principal home loan amount
- Current EMI
- Current outstanding tenor (in months)
- Rate of interest
- Required tenor (in months)
Home loan borrowers should also know that they can enjoy tax benefits on home loan under Section 24(b) 80EE, 80EEA and 80C of the Income Tax Act of 1961.
Willing borrowers should also check the pre-approved offers extended by the leading financial institutions. These lucrative offers expedite an entire home loan application process and help in fast loan disbursals. Borrowers can check the pre-approved offers by feeding in their contact details and names in the required section of their lender’s website.
Now that you know what is the home loan balance transfer process, you can choose this service if you are dissatisfied with the conditions provided by the current home loan provider. Take into account every pointer mentioned above and make a well-informed choice based on your financial capacity and objectives. Additionally, be sure to pay back the EMIs on schedule each month. This will enable you to have hassle-free borrowing while maintaining a high CIBIL score.
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(Disclaimer: The information provided in this article is for general informational purposes only and does not constitute financial advice. Please consult with a qualified financial advisor before making any decisions about loans.)
John Smith, a professional content writer with more than two decades of experience as a writer and editor, covers many topics for ABmantra.com. He began his career writing about Health Tips, Finance, Fashion, Home Decor, Education and many more niches in his hometown of California, USA.
