Everyone has a desire to one day own their own home. It gives you a strong feeling of accomplishment and pride. It also shields you from paying monthly rent and hunting for a new home when your landlord asks you to leave. Nevertheless, purchasing a home in India is not a simple endeavour. You will need to collect significant funding, including many lakhs or even a few crores of rupees.
Home loans require a steadfast commitment over an extended period, as their terms might span years. However, this does not imply that you are mandated to keep your Home Loan with the same bank or financial organisation you chose initially. It is possible to balance transfer home loan to another if the new lender is ready to provide you with a better interest rate.
Or either you are not happy with your current lender for any reason, or you are looking for a new one. It lets you make sound, strategic use of the interest rates that different banks in India are currently offering. Below are the five best advantages of a balance transfer home loan. But first, let’s learn more about a home loan balance transfer.
What exactly is a Home Loan Balance Transfer?
Home Loan Balance Transfer, commonly known as HLBT, is transferring your existing Home Loan balance to a new lender. Because of this, your old loan account will be closed, and a new one will be opened with the new lender. It is also known as home loan refinancing. The home loan balance transfer facility is helpful when getting more benefits from a new lender, such as improved interest rates, reduced prepayment fees, enhanced customer service, and longer terms.
How Does HLBT work?
Technically, when you move your Home Loan to another lender, the new lender pays off the unpaid loan balance to your old lender. As a result, your existing Home Loan account with the prior lender will be closed. At the same time, your new Home Loan account will be opened with your new lender, where you will pay a significantly lower interest rate.
Top 5 advantages of home loan balance transfers
The primary benefit of using a home loan balance transfer feature is that it reduces your house loan’s interest rate.
In addition, you may be eligible for other perks, like pre-approved offers, improved repayment terms, a more flexible tenure, and improved customer service.
Let’s look at some of the best advantages of home loan balance transfers:
1. Reduced Interest Rate
Home loans typically have very high principal amounts and very lengthy repayment terms. Thus, a minor difference in interest rates might have a significant effect on the total EMI. When you transfer your home loan, you can save much on interest for the rest of the term. Please remember that this advantage of a house loan balance transfer is more noticeable in the first few years of a loan than in the later years.
2. Flexible Repayment Options
People switch their home loan balance for more than just a lower interest rate. You may also be able to haggle more favourable repayment conditions with your new lender. The rules for paying back a home loan vary from one lender to another. Also, your new lender might be more flexible about when you pay your EMIs and the schedule for paying back the loan.
3. Better Customer Service
There is a possibility that your overall customer experience will be enhanced if you take out a loan to transfer your balance to a different lender. For instance, not every lender offers conveniences like 24/7 customer service, online payment of EMIs, less home renovation loan interest rate, and complete tracking of your home loan account via a web portal or smartphone application, among other things.
4. The Advantage of Getting a Top-up
If you find yourself in a financial limitation, you might require a top-up in the amount of your home loan. It may assist you in satisfying additional conditions for purchasing your housing unit. Some lenders let you add more money to your home loan, but some don’t. Therefore, you can switch to a different lender for your house loan if the one you currently have doesn’t offer this feature.
5. Better Credit Scores
A clear benefit of transferring a home loan balance is that it can help your credit score in the long run. With lower interest rates and EMIs, a borrower is better able to pay back the loan each month and keep it on good terms. Your credit score has the potential to grow over time if you have a history of consistent debt payments.
Home Loan Balance Transfer is the most remarkable approach to obtaining a cheaper interest rate and the other advantages listed above. While a balance transfer of home loans can be used for various purposes, it is always wise to research the new lender’s policies and evaluate the financial rewards before applying. Because of this, it is firmly recommended to carry out a cost-benefit analysis before carrying out an HLBT.