Home Loan Balance Transfer - Here's How It Works

Mr. Anirudh Bhattacharya, a resident of Asansol, West Bengal, was not happy these days. The reason for his displeasure was none other than the Home Loan that he had availed from a top bank 2 years before.

Everything was good about the loan’s repayment and a recent television advertisement from a leading non-banking finance company giving a lower rate was his reason for displeasure.

Now, he was regretting about paying a higher interest rate and there seems to be no respite unless he heard about the Home Loan transfer!

If you are stuck in a similar situation, you will need to avail the facility of the Home Loan balance transfer to reduce your interest rates and pay lower EMIs.

Let’s know what the Home Loan balance transfer is and more:

What is a Home Loan Balance Transfer Facility?

The balance transfer is nothing but a unique facility being offered by leading online banks and non-banking finance companies (NBFCs) to current borrowers.

In this facility, you are allowed to transfer or switch your existing Housing Loan account from your existing lender to another lender offering you lower interest rates.

Like this, if you avail the Home Loan transfer facility, you can easily avail the lower Housing Loan interest rates on the offer, and pay lower Home Loan EMIs.

However, for availing the balance transfer facility, you also need to pay some penalty and other processing charges to your existing lender.

The balance transfer facility also lets you avail a to-up loan up to Rs.50 lakh to help fund your other needs at a lower rate, and a longer tenor.

Before availing the balance transfer, you should avail it only if you see that the fees being taken for it is lesser than the profits that you will make after availing it.

Understanding the Home Loan Balance Transfer

The balance transfer option lets you seek a House Loan from a lender at lower interest rates than your ongoing loan. The new lender approves the loan request as the new loan and pays the remaining money of the loan to the existing lender. Now you are allowed to pay all your future Home Loan EMIs to the new lender as per the interest rates offered by the new lender. Because you opt for the balance transfer, your old loan account closes and you seek a fresh one from a lender offering it at a lower rate.

Should you Opt of the Home Loan Balance Transfer or Not?

The concept behind opting for the Home Loan balance transfer facility is quite clear yet basic – to make the most of the lower or affordable Home Loan rates on offer. Another thing to take care while doing the balance transfer is that to see if the actual benefit made by a borrower is more than the cost of paying charges for it.

Overall, opting for the balance transfer facility seems to be a profitable one especially if you are an existing borrower and finds a vast difference in loan rates. What’s more, the balance transfer also works if the House Loan is in within the tenor of 4-5 years as the interest part paid is on the higher side during this time.

The Bottom Line

If you think that you are paying a higher Housing Loan interest rate, then opting for the Home Loan balance transfer is surely a profitable move. Check all other aspects like the fees involved and other formalities and then apply for it online!