Home Loan Transfers: What can it do for you?

A home loan balance transfer has several benefits, and a lower interest rate is only one of them.

Let us say that you have moved into your new house and paying EMIs. However, you are not happy about your loan experience.  You may not be pleased with the services of the bank, or you may have found another bank that is offering a better interest rate. In such a situation you have the option of a home loan balance transfer.

When you transfer a loan to another bank, there are several ways you can benefit. We will consider the various things a home loan balance transfer can do for you.

Lower interest rate: This is one of the most significant advantages when you do a home loan transfer. This is particularly applicable when you are paying a higher interest than prevailing market rates. A home loan balance transfer works in a falling interest rate scenario. Even when the base rates go down, some lenders may not reduce home loan interest rates or lower them only after a lag. A home loan transfer to another bank lets you reap the benefits of a lower interest rate.

Save on interest: When you do home loan transfer to a bank that offers a lower rate of interest, there are some obvious benefits. Even a small change in interest rates can help you save a lot of money you pay as interest. Let us say that a repayment of 30 lakh needs to be made over 15 years. If the interest rate is 8.65 percent per annum, you have to pay Rs 23,65,181 as interest. For a reduced interest rate of 8.10 percent, the interest is Rs 21,91,443. The total amount you have to pay taking principal and interest into account gets reduced to Rs 51,91,743 from Rs 53,65,181.

Reduce your EMI: A lower interest rate also means that EMIs will reduce, thus lowering your EMI. This would make it easier for you to manage your monthly payments. In the above example, your EMI will go down from Rs 29,807 to Rs 28,843. A lower EMI will help improve cash flows.

Better negotiation opportunity: When you do a home loan transfer to another bank, you will already have a good repayment record with your present bank. You will thus be in a better position to negotiate. Apart from a lower interest rate, you can also get a better deal as far as the terms of repayment are concerned. For example, if your financial situation has improved, you may reduce the tenure of the loan in which case your EMI will go up, but you will be able to pay back the loan faster. If your financial obligations have gone up, you can opt for a longer repayment term and reduce your EMIs.

Better customer service: Sometimes, you may not be satisfied by the customer service of your existing bank. Also, your current bank may still be following some outdated practices and not providing the benefits that the latest technology offers. In such instances, a balance transfer home loan can be useful.

Option of a top-up loan: There are also some indirect benefits when you go for a balance transfer home loan.

You have the option to avail a top-up loan when you transfer home loan to another bank. Such loans are based on the equity you have in your house. These loans are available at competitive interest rates. The money can be used to for any immediate cash needs like payment of debt or also for renovating your home. A top-up loan is a more affordable solution to get funds compared to other borrowing options like a personal loan. Your current lender may not offer you a top-up loan. However, with a new lender your chances of getting a top-up loan goes up. This is because the new lender will consider the current market value of the property. Also, as said before, you will have a good payment record to show for it.

We have seen what a home loan balance transfer can do for you. To transfer your home loan balance to India Bulls Home Loans, click here.

• What’s More Beneficial? Home Loan Balance Transfer or Top-Up Loan
• Your Checklist For Home Loan Balance Tranfer
• How Home Loan Balance Transfer & Top Ups Work?

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