A home loan balance transfer is also referred to as refinancing home loan and home loan takeover. A home loan balance transfer is the process where an applicant can pay his/her housing loan by transferring an outstanding home loan amount from one financial institution to another. Benefits of doing so include:
- Assists in reducing the burden on the borrower associated with other payments because EMIs are reduced up to 5% depending upon the balance tenure, rate difference, etc. Hence, allowing you to clear the loan in minimum time.
- New lenders could offer other advantages like foreclosure at zero additional charges, customized insurance solutions and more.
- The credit score increases when you opt for home loan transfer.
- The applicant can choose another bank that offers customer service and better interest rates.
Before applying for a balance transfer you should compare the different interest rates offered by various NBC's, and opt for the most competitive lender. The reduction in the rate of interest leads to more monthly savings and this is the major reason for home loan transfer. The home loan transfer also helps in the reduction of the overall loan tenure. Generally, the involves a processing fee of 1% which is payable to the new bank. Today there are many tools available like home loan EMI calculator, that can be used to get a fair idea on financial implications of home loan transfer. Consider the remaining amount, tenure, fee involved and the interest rates reduction before taking the final call.