Applying for a home loan is a long-term commitment, but this does not mean that a borrower has to stick with the same lender during the entire tenure of the loan. There are cases where borrowers struggle with their current loan plan or simply find better home loans offered by a different financial institution. In such cases, they always have the option of opting for a home loan balance transfer. This transfer involves shifting a home loan from one lender to another for better terms. The debt that is with the existing lender is paid off and the outstanding loan amount is transferred to the new lender. The borrower can then start paying the home loan EMIs to the new lender as per the new terms of repayment.
Now, for those who have never heard about a home loan balance transfer, here are some benefits that this move can get for a borrower:
- Lower interest rate
One of the biggest advantages of transferring a home loan is a revised home loan balance transfer interest rate. Even a slight difference in the home loan interest rate could make quite a difference to the EMI payments of the home loan. This could also be vital in bringing down the total cost of the loan.
- Better repayment tenure
Borrowers can also opt for a home loan balance transfer when they are looking for more suitable repayment tenures. By refinancing their home loan to a new lender, it is possible for a borrower to get an extended repayment tenure. This can make the borrower’s EMI payments easier.
- Top-up loan
A lot of borrowers are unaware of the fact that a home loan balance transfer can also involve getting a top-up loan. While a borrower might be applying for a home loan balance transfer to get a lower interest rate, they can also check with the lender about getting a top-up loan.
- Change in the type of interest rate
If a borrower has a home loan with a fixed interest rate, they can opt for a home loan balance transfer if they are looking to shift to a floating interest rate or vice versa. Changing the interest rate by opting for a transfer can result in significant savings.
A home loan balance transfer does not just have to be for financial motives. In certain cases, a borrower might not be completely satisfied with their lender’s customer service. To solve this problem, the borrower could choose to transfer their home loan to a lender that is known for its customer relations. Also, do note that it is better for them to make use of a home loan balance transfer calculator. This calculator is an online tool that helps them understand the revised EMIs after the transfer. A home loan refinance calculator also helps in understanding the borrower’s potential savings on the overall cost of the loan.