The Advantages of Opting for a Home Loan Balance Transfer Facility
Buying your own home is nothing less than a dream come true. It is like a culmination of your many years’ hard work and sacrifices, but it is also true that this dream would not have been realized without the immense help provided by your Home Loan. Due to the rising prices of residential properties all over India, it is not possible for most prospective homebuyers to realize their dream of owning a residential property through outright purchase. This is where a Home Loan comes to the rescue and allows you to purchase a property by just paying the margin money in the beginning and repaying the entire amount over the agreed repayment tenure that can stretch up to 30 years.
Serving the EMIs of a Home Loan is a significant commitment, one which you would have to take care of for most of your working life. As the repayment tenure for a Home Loan can stretch up to 30 years, and the amount borrowed running into lakhs and crores, even a small reduction in the interest rates can result into significant savings. That is why it is advised that while availing a Home Loan you must negotiate hard with your lender because “money saved is money earned.”
It is possible that due to prevailing circumstances or issues with your credit score, you had o avail the Home Loan at higher interest rates. Now, if you have been serving the Home Loan EMIs (Equated Monthly Instalments) regularly, this would help to repair your credit score. As your credit score reaches the level of 750+, it changes the scenario significantly for you. Now, as your credit score has improved considerably, you can avail lower interest rates on your Home Loan from other lenders. You just need to Apply for Home Loan Balance Transfer Online.
About Home Loan Balance Transfer
As the name suggests, Home Loan Balance Transfer (HLBT) is the process of transferring your existing high-interest Home Loan from an existing lender to another lender at lower interest rates. All lenders want customers who have good credit behaviour, are responsible borrowers and make repayments on time. When you apply for HLBT, the new lender will repay the entire amount due to the existing lender, take all the papers and create a new Home Loan account in your name. You will now need to repay the EMIs towards the new Home Loan account.
Lower interest rates are one of the main reasons for the Home Loan Balance Transfer, but there are other reasons also that can compel you to take this decision:
- Availability of top-up loans
- Unfavorable behaviour of the existing lender
- Additional freebies offered by the new lender
- Extended repayment tenure offered
Before you opt for this facility, you must do a cost-benefit analysis, to understand if the benefits to be availed from HLBT are more than the costs incurred or not. If your loan is towards the completion stage and only 4-5 years are remaining, then opting for this option would be costly than the benefits available.
Benefits of Opting for a Home Loan Balance Transfer
Savings on interest cost
When you transfer your existing Home Loan to a new lender at lower interest rates, you save a significant amount of money to the total interest costs that you would have to pay. As the amount for a Home Loan can run into crores of rupees and repayment tenure can go up to 30 years, even a slight reduction in interest rates results in substantial savings. Money thus saved can be used to repay the loan earlier than the loan schedule and save further money on interest expenses.
When the interest rates are reduced, your monthly installments will also reduce correspondingly. This development would make your EMIs more affordable for you, thus reducing the chances of default.
Change in repayment tenure
When you are opting for HLBT, you can negotiate the repayment terms with the new lender. You can choose a shorter repayment tenure as the EMIs are now more affordable for you. This way you will be able to settle the loan earlier and save money on the interest expenses.
Top up loans
Many lenders offer the facility of high-value top-up loans along with HLBT. This amount may go up to Rs. 50 Lakhs and can be used by you for any financial requirement of yours. A top-up loan is generally offered at 1-2% higher interest than the Home Loan and as such is much affordable as compared to a Personal Loan.
All lenders want a good customer, who makes EMI payments on time. As you are a responsible lender and would be repaying your EMIs on time, you will receive better services from the new lender. You must choose a new lender whose level of service is satisfactory according to you.
Home Loan Balance Transfer is an excellent option for you to reduce your EMI liabilities and save on the interest cost, but you must make sure that the benefits to be availed are higher than the costs involved. Otherwise, the whole purpose of this exercise would be defeated.
To apply online for Credit Cards, Secured Loans and Unsecured Loans, visit www.mymoneymantra.com, the leading online lending marketplace that offers financial products from 70+ Banks and NBFCs. We have served 2 million+ happy customers since 1989.
Talk to our Loan Specialists toll-free at 1800 103 4004 to know more about our products and offers.