Many people face difficulties in paying off their home loans, and one common reason for this is the high interest rates. A high rate on the loan can make a significant difference to the EMIs of the home loan. However, the good news is that home loan interest rates are falling. If you have taken a loan recently at a high interest rate but now find a lender offering a better deal, you can opt for a home loan balance transfer.
Home loan balance transfer is a procedure of shifting an existing home loan from one lender to another for better benefits such as a lower interest rate. Go through below parameters before opting for a balance transfer.
- Check the principal amount left to repay
When you decide to go for a home loan transfer, check the principal amount that is left to be repaid. It is always advisable to opt for this transfer during the initial stages of the repayment tenure and not towards the end. This is so that you can get the maximum benefits of the new loan plan, which you might not be able to do if a majority of the loan is already paid off.
- Look at the home loan balance transfer interest rate
This is one of the biggest reasons why most borrowers opt to transfer their home loans from one lender to another. The interest rate plays a big role in the overall cost of the loan. This is why you should make sure to choose a lender that is offering a lower home loan balance transfer interest rate. This will help in making the repayment plan easier. Doing so not only reduces the cost of the loan but also improves the credit record after repaying loan on time.
- Always focus on the charges involved in the transfer
Many people neglect this, which could defeat the whole purpose of transferring the existing loan. Just because a lender is offering a lower interest rate does not mean that going for the new plan will always save money. It is also important to inquire about the charges involved such as the transferring fee, processing fee, etc. that the new lender imposes on the home loan transfer.
- Evaluate the savings this transfer would make
The ultimate goal of the transfer is to save money on the total cost of the home loan. So, calculate the amount that is spent on the loan transfer and compare it to the amount that you will save based on the new loan plan. Make use of a home loan balance transfer EMI calculator to ensure the monthly instalments are affordable. This way, there will be no problem in clearing the housing loan with ease.
Also, do remember to check with the lender regarding the documents required for home loan balance transfer, such as the foreclosure letter, letter of consent, NOC (No Objection Certificate), documents of the existing loan, property documents, KYC documents, financial documents, and so on.