People research and compare the best deals when applying for a Home Loan. Finally, they choose a bank that matches their needs best. When selecting a particular Home Loan, it might be the best deal on offer. However, there could be another deal that matches your requirements even better.

In such cases, transferring your Housing Loan to this new lender for better terms might be an excellent option. This process is called a Home Loan balance transfer. Let’s learn more about it.

Overview of Home Loan balance transfer

A Home Loan balance transfer is also called refinancing. Several banks offer it. If you match the eligibility requirements, you could switch your Housing Loan to the new bank and enjoy a better deal.

Reasons for a Home Loan transfer

People usually opt for a Home Loan balance transfer to enjoy a lower interest rate on their Loan. You can also opt for such a balance transfer for the following:

• Better services
• Pre-approved offers
• Revised terms of repayment

Benefits of transferring Home Loans

Carrying out a Home Loan balance transfer can offer the following advantages:

• Avail of a Top-Up Loan

If you require additional money to cover expenses related to a wedding, debt consolidation, home renovation, vacation, etc., transferring your Loan provides access to a Top-Up Loan. A Top-Up Home Loan works like a Personal Loan since it has no end-use restrictions. Such a Loan is offered on top of your current Housing Loan.

To secure this Top-Up Loan, you need a good credit score and a monthly income that covers the additional Loan amount. You should also have a clear repayment history of six to 12 months, depending on the lender you pick. Your bank may also look at your present age and the outstanding amount of your present Home Loan.

• Enjoy lower interest rates

The main reason borrowers carry out a Home Loan balance transfer is to enjoy the advantage of a lower rate of interest provided by another lender. Since the interest rate is a crucial factor in determining your equated monthly instalment, a lower rate can reduce the EMI of Home Loans. Suppose you get a lower interest rate from another lender and have borrowed a Loan of Rs 50 lakh.

In such a case, you could reduce your Rs. 50 lakh Home Loan EMI by transferring your Loan to a new bank.

• For part-prepayment facilities

With part-prepayment, you can pay off a part of your outstanding Loan principal. This decreases your tenure and EMIs. This also helps save interest. If your present lender charges a high cost for part-payment or does not allow part-prepayment, you can carry out a Home Loan balance transfer with a bank that offers such a facility.

Conclusion

Borrowers can benefit from a Home Loan Balance Transfer. However, it is crucial to make an informed decision when doing so.