Over the years, the home loan industry in India has evolved significantly. Many lenders or financial organisations offer a variety of unique services and benefits to make home loans lucrative for the borrowers. One such service is the home loan balance transfer.
If you are nursing a home loan with any lender, and if you are unhappy with their services or if you feel they are charging a higher interest rate than the existing market rate, you can transfer your loan from the existing lender to a new one. This is called home loan balance transfer. The process of home loan transfer is like porting your mobile number from one network provider to another.
Home loan balance transfer, which is also commonly referred to as home loan refinancing allows you to avoid paying a higher interest charged by one lender and move the loan to a different one. With a balance transfer of loan, you can repay the outstanding amount at a lower interest rate.
Why should you opt for a home loan transfer? Repaying the home loan requires careful financial planning and it involves paying a significant amount for a long period. When the interest rate is high, it can be challenging to keep with the repayments. With home loan balance transfer, you can repay the amount at a lower interest rate and subsequently the EMI will become more affordable.
Let us understand more about the benefits of home loan balance transfer
- When you exercise your right to transfer your home loan from the existing lender to a new one, you get the benefit of lower EMI as your interest rate will be revised. Even a small discount of 0.50% in the interest rate can help you save a significant amount in the long run.
- Depending on the new lender to which you transfer the home loan to, you may become eligible to avail of an additional loan or top-up loan as the eligibility criteria for additional loan varies from one lender to another. This can help you avail additional credit for buying a larger home or do renovation work in your existing work.
- Another significant advantage of opting for home loan balance transfer is that you can get better services from the new lender. For example, the new lender may offer better repayment flexibility or may even consider your request for extending the repayment tenure so that your EMI becomes much more affordable. Also, the new lender may have lower prepayment fees than the earlier lender.
- Lastly, when you transfer your home loan from one lender to another, you can renegotiate the loan terms with the new lender. You can either increase or decrease the loan tenure as per your current financial condition and repay the balance amount as per the revised structure.
Now that you know about the home loan balance transfer benefits, it would help to know how to initiate the transfer process.
- Visit the new lender’s website or personally visit their office to know about the loan terms and conditions. Make sure that you specifically read about the transfer fee, processing charges (if any), documentation, interest rate, etc.
- If you are happy with the terms, fill the home loan balance transfer application form and submit the same along with the relevant KYC documents.
- Get the necessary documents for completing the transfer from the old lender and a consent letter.
- After reviewing your transfer application, the new lender will provide you with the new terms and conditions. If you are happy with the same, pay the necessary fees (if any) and wait for the approval.
- Once you get the transfer approval from the lender, they will pay off the balance amount to the old lender and your new loan account will start.
Home loan balance transfer is an excellent facility that helps you manage the repayment more efficiently.