What is Balance transfer of home loan?

It can be defined as an important financial tool that can help to minimize the burden of EMI’S. It is usually initiated when the complete unpaid principal loan amount is transferred from one to another lender for a lower rate of interest. These lenders may be banks, other financial institutes etc. Generally, all the banks offer such facilities. If one is capable of paying the EMI’s regularly, then it is all sorted and the process becomes easier. It works best if you are in the initial stages of your home loan.

While making the decision to go for a balance transfer of home loan, few essential factors needs to be kept in mind. It becomes crucial to analyse the lenders who are involved with offering the home loan balance transfer. You may choose to go for deal that seems to be appropriate in terms of the cost effectiveness as well as is a time saving option.

Here mentioned are some of the benefits of Home Loan Balance Transfer to other bank:-

• It helps to lower the monthly payable EMI since there is a transfer of home loan from one lender to another lender. The reduction in the EMI can be quite relieving.
• It provides an opportunity to save money. This is because it brings about a reduction in the interest rate at which the home loan is offered.
• Transferring your home loan can also prove to be of great help as far as increasing the credit score is concerned.
• While you opt out for a home loan balance transfer you can choose as per your suitability and also make the needed negotiation with your new lender.
• In case of a home loan balance transfer, one can also make changes in the tenure period with the new lender.
• No processing fees are included in Home Loan Balance Transfer and the new bank will strive to provide you with the better customer service.
• While transferring home loan the financial institutions can offer top – up loan too. It can be availed at lesser rates and you can make use of them to pay off the debts.

 
Conclusion:-

After an overview of the benefits, the conclusion that can be derived is that the home loan balance transfer is a very useful financial tool offering higher tenure of the home loan. With this tool, the home loan burden can be reduced to some extent, because through this availing relatively low rate of interest is possible. A low rate of interest makes it a popular choice amongst the business entities or individuals.

Anyone who wishes to utilize this financial tool should firstly analyze the internal rate of return from the transfer. In those cases, where the amount to be paid is lower it is always better to keep away from the home loan balance transfer. This is particularly because a person might mistakably pay a much higher amount of money in comparison to the lender. This might not be a correct financial decision in such scenarios. In fact, it can result in losses to the business.

While in the financial situations, where the unpaid amount of loan is really high and the person is in the initial stages of the loan, the deal is good enough, opting for Home Loan Balance Transfer would be the right financial decision.

You should maintain a good track record of repayment with the current lender whenever you wish to go for home loan transfer.

Always remember that a meticulous and correct decision with regard to the finances can benefit you in a number of ways. So, think before deciding on using any financial tool.