If you have wanted to consolidate a home loan but have been put off by the thought of high fees and penalties you may want to consider applying for a balance transfer. This is what a home loan balance transfer is and how it works.
Today, a majority of the home loan applicants are looking for ways to reduce the interest costs. This is one of the main reasons why home loan borrowers are looking to switch their home loan to another institution. The practice of doing such a thing is called balance transfer and it happens when you switch your existing home loan to another lender after making some changes in your payment schedule.
The home loan balance transfer is often recommended to those who want to save on interest and make some money from their current bank, but aren’t sure if it’s actually worth it. Your home loan lender is only interested in getting one thing: a flat fee for each time you borrow money. Just like any other business in the financial market, they don’t care about your benefits and headaches. They’re just thinking about how much they can make each year on one customer, which usually means they’ll try to get as much money out of them as possible by minimising any other costs that come along with your loan such as fees, late payments and more.
If you are struggling to repay your home loan and are looking for a solution, a home loan balance transfer may be the option for you. A home loan balance transfer process is a way of transferring the loan from one lender to another with no change in interest rates or charges. It can also help save on EMIs and tenure. Here are some key benefits:
The major benefits of a home loan balance transfer are as follows:
Individuals have to pay lower interest.
Repayment terms are more relaxed.
One generally gets smaller EMIs and longer tenure.
Applicants can get a top-up on their existing home loan.
Individuals can also avail pre-approved offers. New lenders usually tend to offer better customer service.
What Is Home Loan Balance Transfer And Why You Should Consider It
A balance transfer is a great way to save money on interest charges, but it does come with some risks. If you’re considering using this method, there are some things that you should know first:
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• The repayment tenor is quite flexible and generally ranges from 20 to 30 years.
• Require minimal documentation.
• Individuals can customise their repayment options.
• The loan which the new lender offers is free of end-use restrictions.
Most lenders do not have any foreclosure charges or part-prepayment clauses.
When Should You Opt for Balance Transfer?
When and why should you opt for a balance transfer? Here are two reasons why one can consider opting for a balance transfer facility:
In case a borrower is paying a higher rate of interest towards a loan which comes with lower interest rates in other financial institutions.
Even after having a cordial relationship with the financier for a long period, the lender is unwilling to reduce the lending rate.
Ideally, a borrower should opt for a housing loan balance transfer facility after paying EMIs of an existing loan for 12-18 months.
If you’re thinking about transferring your home loan balance to save money, here are some things you should consider first:
1. Is it possible? You’ll need to contact the lender who holds your credit card or line of credit and ask them if they will allow you to transfer your loan. If not, then it may be time for a new home loan instead! For more information, you can may seek help from home loan customer care number.
2. How much can I save? Check out the details about how much you can save by switching from one interest rate to another. You can also use our tool below to calculate exactly how much you’ll save!
3. Do I have any other options? Try looking into alternative options before deciding on one particular lender or taking out a new home loan altogether!