Home Loan Balance Transfer in the process by which one could transfer their existing Home Loan to another bank or NBFC if they wish to, which is often the case when they find the other bank or NBFC offering a lower interest rate than what they are currently paying to their bank or NBFC. One has to apply for the Home Loan Balance Transfer by filling in an application. Certain information like the amount one would save on the loan as well as top up loan has to be provided. Naturally, once approved, it brings down the EMI amount and the debtor ends up saving money which he utilizes on the other aspects of looking after his household.
However, the debtor cannot make the application of balance transfer immediately after he has been approved for the Home Loan. He has to make at least 12 consecutive EMI payments to his own bank, without any defaults or dues, before he can apply for balance transfer. This is to ensure the new bank that the debtor is a reliable person to lend to and take on his loan. There have to be quite a few benefits of balance transfer or else why would someone want to opt for it.
- The Home Loan interest rates are significantly lowered. In case there is a security provided for the loan, the risk of the lender is further reduced and hence the interest on the mortgage also becomes lower. This allows the debtor to successfully pay off his loan without his security being taken by the bank for non-repayment. The reduction of Home Loan interest rate could be up to 5% depending on the bank you are transferring to and this is a significant amount. Imagine your Home Loan interest coming down from 15% to 10% only. Opt for the housing loan calculator to calculate your savings.
- Balance transfer options still allow pre-payment facilities. Some debtors often doubt whether opting for the transfer would mean they would not be allowed to make prepayments anymore. The debtor would still be able to pre-close the loan if he wants to. There are no additional charges for opting for the transfer.
- Since the first bank had already conducted all the necessary verification while disbursing the loan, there is a lot less paperwork to deal with while making the balance transfers. Yes, the second bank will of course once look at the credentials and the existing loan documents, but by and large, the process is not at all time consuming and requires very like paperwork. So go ahead and Home Loan now and you can always transfer it later.
The Top Up value offered is often higher compared to what the first bank was offering. The loan repayment is going to be faster with the reduced EMI rates and this will in turn help in getting bigger amounts of loan for any top-up requirement. The interest saving is going to apply to the present EMI, the outstanding principal amount and as well as to the existing interest charged by the first bank.