Guest Post – Should You Opt for a Home Loan Balance Transfer Now?
The year 2017 has appeared to benefit the new home buyers a lot. To control the inflation, Reserve Bank of India has cut down the repo rates by 25 basis points which have resulted in cheaper Home Loans. However, this news might please the new loan applicants, whereas the news has certainly disappointed the existing Home Loan borrowers.
After the announcement of budget 2017, various fiscal policies have been introduced which has not only profited new investors but also has gained the developers as well as Home Loan lenders. However this is the case, the new policies don’t show any sign of helping the existing Home Loan borrowers. If you are stuck in such a situation, then you are only left with two options – you can either continue with the current Home Loan rates or transfer your Home Loan account to another lender or scheme. There are many banks and Non-Banking Financial Companies (NBFCs) which offer Home Loan balance transfer.
What is Home Loan Balance Transfer?
A balance transfer is transferring the entire unpaid loan account to another financial institution, to get a low rate of interest or to obtain better schemes. At times people find a lender who charges a low-interest rate or better schemes than that of their existing lender. During such a situation, they prefer a Home Loan balance transfer rather than sticking to the old schemes and high-interest rate offered by their existing moneylender.
In order to benefit with the new Home Loan rates, you can opt for a balance transfer. But before going for one, it is important to check certain points that can help you decide – whether you need a balance transfer or not?
Before you choose a lender, it is very important to do the in-depth research. As you know interest rates offered by different financial institutions differ, and so it is essential that you select a lender who offers you a low Home Loan rate. Also, when researching, make sure you opt for the best schemes as you don’t want to regret on your loan decision again.
A balance transfer is equivalent to availing a new Home Loan, so the process is totally a new one. Although you are familiar with the loan process, it can still be different with the new lender. Thus, it is essential that you don’t miss out on any document. The new financial institution might ask you for a No Objection Certificate (NOC), bank statement, income slip, etc. It is important that you have all the necessary Home Loan documents needed.
- Tenor period:
Many people always rush to get a balance transfer, if they find out a lender offering low Home Loan rates than the existing one. But they often forget to check on their tenor maturity. If you are left with a less tenor period then transferring your account is not a good idea, as you will end up extending the tenor period. You should only avail a balance transfer if you are left with a tenor ranging from 10 to 15 years.
- Processing fees:
When availing a Home Loan balance transfer, the new lender will charge you with processing fees. These processing fees differ from each lender. So, it is important to check them too when researching for interest rates. At times, if the processing fee is high you might end up increasing your payments.
If your current lender refuses to offer you a top-up loan or a new Home Loan scheme then only you should opt for a balance transfer. Before approaching a new financial institution, it is important that you negotiate with your existing lender. If the lender does not agree, then you can think about transferring your loan account.
Concluding with, you should make sure that the lender that you are opting for offers you the best schemes and Home Loan rates. However, if you are not making the most out of a balance transfer, then it is suggested not to do so and continue with your existing lender only.