Transferring the balance of your home loan is also called refinancing. In this method, the outstanding amount of your existing home loan is transferred to a new loan account. If the outstanding amount is substantial but you are having difficulty repaying it due to reasons like high interest rates, limited repayment options and short tenure. If you are not satisfied with the services of the current lender, you can choose a new lender for the balance transfer. This facility is available for not just home loans but also loans against commercial properties.
Here are the various benefits that you can enjoy after a home loan balance transfer.
Avail a Lower Rate of Interest
If your current lender charges a high rate of interest on your home loan, you can transfer the outstanding loan amount to a new lender offering a lower interest rate. As a result, you can save on interest payments. This can help repay the loan conveniently.
Lower the EMI Burden
If the interest payable on the home loan gets reduced, the EMI value will also go down. In other words, your EMI burden will be lightened. As you can afford the EMIs better, you may find it easy to repay the outstanding amount.
Increase the Repayment Tenure
Some lending banks offer home loans for tenure as long as 25 years. If your current lender has offered you a short tenure, you may find it difficult to repay the loan. In that case, you can choose a lender offering a longer tenure and transfer the outstanding amount of your current loan to the new lender. If the tenure increases, the EMI value will reduce. So, it may become easier to pay off the EMIs and close the loan on time.
Flexible Repayment Options
Your current lender may not offer you multiple options to repay the loan. If you have a problem with that, you can choose a lending bank that offers flexible repayment options. These usually include:
Step-Up Repayment Facility (SURF): In this method, you can increase the value of your EMI payments as your income goes up. This can often help you pay off the loan earlier. Part-fixed & part floating-interest rate: In this option, the interest rate remains fixed for some years and then becomes floating. Both can be beneficial. If the rate is fixed, you need not worry about any increase in the rate or paying higher EMIs. On the other hand, a floating rate can change over tenure. So, if the rate falls, you can pay lower EMIs. Flexible Loan Instalment Plan: This plan is suitable for those who are approaching retirement or whose income may reduce in a few years. Equated Monthly Instalments (EMIs): This is the typical way in which a home loan, a loan against commercial property and any other loan is repaid. In this method, you need to pay a fixed amount of EMI even if your income goes up.Get Better Services
You may not be happy with the customer care services of your current lender. In that case, you can choose a lending bank offering better services, including attractive offers and deals at its branches. Then simply transfer the balance of the existing loan to the newly chosen lender.
Don’t forget to check the loan against property eligibility criteria specified by the new lender when you decide to make a home loan balance transfer. Once you meet the eligibility criteria, check all the documents required for the application. If you opt for a balance transfer under the same lender, you need not submit too many documents since the lender already has them.
