Buying a home is a dream for many, and home loans help in making that dream come true. But what if the lender you chose initially doesn’t suit you anymore? Can you go for a home loan balance transfer? Let’s discuss the details of home loan transfer and dissect its benefits for a better understanding.
What is a home loan balance transfer?
A home loan transfer, also known as refinancing, is a process in which you can change the lender of your home loan to get a better deal. In today’s highly competitive financial world, almost every lender gives you the freedom to get your home loan transferred to another lender.
It is similar to switching a job when you get higher pay somewhere else. You talk to your HR and sometimes he negotiates to give you some added benefits to keep you in the office. In the same way, when you find a lender who is providing you a better home top up loan, you talk to your lender. Either he’ll let you transfer or give you some added benefits.
When to go for a home loan balance transfer?
Here are some circumstances when you should opt for a home loan balance transfer.
- In the initial days of loan: Getting a home loan transfer makes more sense when you are in the initial period of the loan. The transfer process usually requires some fee, which might occur to you as a loss if your loan is already about to end. When the time is more, the sum will be more, and therefore, the difference in the profit will be more.
- When you find a cheaper interest rate: Do not consider a home loan transfer if there is not much difference in the interest rate given to you by your present lender and the new lender. A home loan balance transfer will make the most sense if the difference is stark so that you will save a chunk of money in the coming years.
- Ignorant current lender: If your current lender is not responsive to your needs or is failing to provide you a proper customer experience, you should start looking for other lenders.
- Home top up loan opportunity: These days, some lenders also give you the option of taking a home top up loan, in which you can take a top-up loan on your basic loan that can be used for unlimited other things. A top-up loan works as a personal loan that you can use for anything you want and also gives you income tax relaxation up to Rs. 30,000.
The homeowners need to analyse the costing of every factor involved in the loan transfer process. Sometimes, the interest rate can be lower, but other costs can be much higher than your present lender. In this scenario, you will not get any profit from the transfer and will also have to pay the transfer charges.
Benefits of home loan transfer
- Reduced EMIs: The primary benefit of a home loan transfer is to get a better deal in the rate of interest, which reduces the EMI. You can also increase the tenure of your loan and reduce the EMI even more.
- Part-prepayment option: Some lenders also provide the option of prepayment of loans, in which you can pay a part of the loan in bulk, which reduces the EMI.
- Top-up loan: You get eligible to get a top-up loan if you consider a home loan transfer which serves as a cherry on top.
How to go for a home loan transfer online?
The process of home loan transfer is almost the same as getting a new loan. It requires a lot of documentation and patience. However, now you can go for a home loan transfer online. Here’s how:
- Identify the new lender with whom you want to work with.
- Ask for the loan statement from your current lender, along with a No Objection Certificate.
- Try to negotiate with your current lender, in case they might give you any special deals to save you from going through the tedious process of transfer.
- Get your loan approved by the new lender and inform the previous one about it.