Have you ever considered switching out your home loan provider for a different one? Perhaps you noticed a lower rate of interest advertised, or maybe the coverage offered fits your preferences better. It is the protocol to research the best home loan options when buying a policy, but sometimes, you might just want to change lenders since you get a better deal. This is exactly where a home loan balance transfer comes in.
What is a home loan balance transfer?
A home loan balance transfer is the refinancing that happens when you switch your home loan lender. As a borrower, once you match the required eligibility to transfer your home loans, you can switch as you see fit. The most common reason behind people opting for a home loan balance transfer tends to be a more attractive rate of interest. The following scenarios detail when a home loan balance transfer is recommended:
- Reduce costs: It might be tempting to transfer lenders when looking solely at the chance of getting a lower interest rate. However, note that there are costs to switching out your home loan. Look at the total benefits involved and consider the overall costs of switching your home loan. When benefits are higher than the costs, you should consider switching your loan policy.
- When you are far from approaching the end of your policy tenor: If your policy is reaching the end of its tenor relatively quickly, such as within a matter of months, it would be unwise to switch lenders. In case your home loan is in its initial few stages, a balance transfer is considered advisable.
- When the unpaid home loan amount is high: Is the majority of your loan amount still unpaid? In this scenario, opting for a lender at a lowered rate of interest is probably advisable. This implies that you will get to pay the remainder of your loan at a more attractive rate of interest.
What are the benefits of a home loan transfer?
A home loan transfer comes with a host of benefits.
- Lower ROI: The most obvious and attractive benefit is the fact that the interest rate is lowered. This is also the primary reason why borrowers opt for a home loan transfer. A lower rate of interest can reduce the EMI as well as the eventual cost of the loan.
- Longer tenor or reduced EMIs: Another key reason why borrowers opt for a home loan balance transfer is the lowered rate of interest offered by a different lender. Lower interest rates reduce the EMIs, and eventually the overall loan cost.
- Top-up option: Sometimes you might need extra funds to cover a large project such as a home renovation. If your current home loan amount doesn’t suffice, a loan transfer could enable you to receive a top-up facility.
- Other benefits: You might find that your new lender offers more benefits which prompted you to switch. These benefits could be more flexibility and affordability.
The Bottom Line
A home loan transfer is considered a good decision in circumstances where you wish to reduce your EMI costs, get a lowered rate of interest, and generally save money on your loan repayment. You can even consider the highly flexible home loans options available on Piramal Finance. You get hassle-free processing, and simple repayment terms for loans that serve your needs.