The dream of homeownership often compels people to seek financial assistance in the form of home loans. Home loans are a long-term commitment and very often, an individual’s life and repayment capacity changes while they are still repaying their loan. More than anything, very often, it so happens that individuals work on their credit profile and improve it, making them eligible for better or lower home loan interest rates over time. Therefore, many home loan borrowers opt for the home loan balance transfer facility offered by lenders these days.
Home Loan Balance Transfer Explained
Home loan balance transfer is a facility offered by most lenders these days. Using this facility, home loan borrowers can transfer the balance amount on their home loan to another lender. In the majority of cases, lenders opt for a home loan balance transfer to benefit from a lower home loan interest rate. However, sometimes borrowers also choose to opt for this facility to avail themselves of a top-up loan or simply switch lenders. Here’s how a home loan balance transfer can prove beneficial.
1. As previously mentioned, in the majority of cases, lenders choose to go for a home loan balance transfer to benefit from a lower interest rate. By switching to lower home loan interest rates, borrowers have a chance to switch to lower EMIs and have monthly higher purchasing power. In other words, by helping you switch to a lower interest rate, a home loan balance transfer can help you switch to a better lifestyle as well.
2. When you switch to a lower interest rate, the cost of borrowing the loan automatically goes down. This helps build savings. To understand how much money you will save by transferring your loan to another lender offering lower interest rates, use a home loan calculator or a home loan balance transfer calculator.
3. If you can avail yourself of a lower interest rate loan and you decide to continue paying the same EMIs as you are paying now, you will be able to become debt-free sooner than anticipated and since becoming debt-free quickly is very high on most people’s list, a home loan balance transfer can prove to be a very good idea.
4. Lastly, home loans are a long and arduous journey and in this journey, one must find a partner they can trust and who is known for quick and prompt customer service. So, if you are tired of your current lender’s sub-standard service, you must apply for a home loan balance transfer.
Home Loan Balance Transfer Calculator Explained
Individuals on floating interest rates can close their loans at any point in their home loan journey without paying a penalty. So, if one decides to transfer their home loan from their current lender to another offering better loan terms and conditions, they won’t have to pay anything to their current lender to close their loan account. However, the lender to whom they will transfer their loan will charge a home loan balance transfer fee, which can range from .5% to 2% of the home loan amount.
A home loan balance transfer calculator is an online tool that allows home loan borrowers to calculate the total money they will save by transferring their remaining loan amount to lower home loan interest rates. This handy tool will also tell you your new EMIs. The home loan balance transfer calculator is fairly simple to use. Simply enter the following information:
– Outstanding loan amount
– The home loan interest rate at which you are repaying your loan
– Remaining loan tenor
– New interest rate being offered to you
– New tenor that you wish to go for
The home loan balance transfer calculator is quick, and accurate and helps borrowers save an immense amount of time and energy which they can devote to searching for the right lender for them. The home loan balance transfer calculator also provides borrowers with all the information they need at their disposal to make the right decisions regarding their home loan balance transfer.
A home loan balance transfer is a highly beneficial facility that lenders have started offering more recently. If you find another lender willing to refinance your loan at better loan terms and conditions, go ahead and opt for a balance transfer. However, use a home loan balance transfer calculator to make sure your decision will fetch beneficial returns. Also, use a home loan calculator to plan repayment beforehand. Further, keep in mind that your lender will approve your home loan balance transfer application only if you meet their home loan eligibility criteria. So, apply only if you meet all the qualifying criteria or your application will get rejected and your chances of getting approved for a loan in future will considerably reduce.
