Everyone dreams of buying a home. It is considered an achievement when you own your own home. Yet, purchasing a home in India is a process that requires a certain amount of planning. Many people turn to housing loans to help them achieve their dream of purchasing a home. With housing loans, you can get the financing you need to buy a house or apartment. The most prominent benefit of housing loans is that you can purchase property you wish to own and set convenient EMIs spread out over a lengthy period.
Many banks and NBFCs in India provide housing loans and it is vital to choose the best lender for you. An important part of the required research you must conduct is checking if home loan balance transfer options are provided. This is when you want to change your housing loan lender to a new lender because of better deals offered.
What Is A Home Loan Balance Transfer?
Using a home loan balance transfer, you can switch or transfer your existing home loan lender to a different lender. To do this, you will have to create a new account with the new lender and close your housing loan with your previous lender. Housing loan refinancing is another name for home loan balance transfers.
The home loan balance transfer option is helpful when receiving extra benefits from a new lender, such as:
- Better interest rates
- Lower pre-payment penalties
- Better customer service
- An extended tenure
With home loan balance transfers, you can transfer your loan to a different lender for an amount equal to the remaining balance on your previous mortgage.
Why Are Home Loan Balance Transfers Done?
Making use of home loan balance transfers can help you lower the interest rate on your mortgage. Besides this, there are also other advantages such as pre-approved offers, a better repayment period, more flexible tenure and improved customer service. Here are the benefits of home loan balance transfers in detail:
- Less Interest The main advantage of home loan balance transfers is that you can reduce the interest rate on your housing loan. Therefore, you have the option to pay less interest on your housing loan, which will bring down your monthly payments. You can also use home loan balance transfers to transition from a fixed to a variable interest rate.
- Easier Conditions for Repayment People make home loan balance transfers if they have been able to negotiate better repayment conditions. Home loan repayment terms and conditions differ from lender to lender. For example, a new lender may be able to offer you housing loans with a better tenure than your current lender. This will make the EMIs easier to manage.
- Pre-Approved DealsLenders sometimes create pre-approved offers to attract new customers. They provide good interest rate savings on housing loans and other beneficial features. If you have found a lender with better pre-approved offers, you can consider home loan balance transfers to take advantage of such offers to pay off your housing loan easier or improve your borrowing experience.
- Increase Your Loan Amount You can opt for a home loan balance transfer to increase your loan amount if required. This may help you meet certain financial requirements that come up while purchasing your home. While some lenders provide top-up options for housing loans, others do not. If your current lender does not allow you to do this, you can consider a home loan balance transfer to a lender who will increase your loan amount.
- Better Customer ServiceIf the customer service provided by another lender is better than your current lender and you want to take advantage of these benefits, you can look into a home loan balance transfer. For example, you may find a lender that offers 24-hour customer support, online EMI payments or full account monitoring via a web portal or smartphone app. In this case, you can decide on a home loan balance transfer to get better customer service.
How To Do A Home Loan Balance Transfer
Home loan balance transfers are a simple process that requires little paperwork. Once you have done your research and decided on a lender, these are the steps to follow:
- Obtain a ‘no objection letter’ from your current lender on the home loan balance transfer.
- Ensure your important documents come back into your possession from your existing lender.
- Finalise the loan repayment from your new lender to your old one.
- Officially begin your new loan agreement with your new lender.
Home Loan Balance Transfer Checklist
Here is a checklist of things to consider before proceeding with a home loan balance transfer to a new lender:
- New Lender’s ReputationWhen another lender provides a lower interest rate, it is easy to get interested in this offer. But, before doing a home loan balance transfer, do your research on the reputation of the new lender and make sure they are well-established and reliable.
- Refinancing Fees vs AdvantagesYou must carefully weigh the pros and cons of a home loan balance transfer which includes finding out if there are any possible charges. It is important to only proceed with a home loan balance transfer if the benefits outweigh any disadvantages.
- Eligibility And DocumentsCheck your eligibility for a home loan balance transfer with the new lender before applying for the transfer or closing your existing loan. Check that you have all the required documents that the new lender requires as well.
- Terms and Conditions of New LenderBefore finalising your home loan bank transfer to a new lender, you must be informed of the new lender’s terms and conditions. Read the fine print, and only proceed if you are satisfied and the new lender meets all your conditions.
Home loan bank transfers have many advantages. But, take your time to consider whether you should refinance your mortgage with a new lender. Before making this important financial decision, conduct thorough research and weigh the pros and cons. Be sure to reach out to your existing and your new lender for any questions that you may have since it is important to make a decision having all the information you need. Visit Piramal Finance for more information on home loan balance transfers and guidance on housing loans!