Are you paying high-interest rates and charges for your home loan? Is a high EMI piling on your monthly income? Those who feel the interest rates are too high or the EMI is a burden can choose the option of the home loan balance transfer.
Refinancing or transferring housing loan can help you avail lower interest rate. Thus, making the EMIs affordable. Before moving the outstanding amount to a new lender, you have to read the rules and regulations of the existing lender as to when can you move your amount. Some prevent transferring of the loan to a new lender.
In case, the clause mentions prevention of balance transfer, then re-negotiate the interest rate with your existing lender.
And those whose lenders allow home loan balance transfer should remember the following factors:
- Check if the lenders are offering affordable interest rates. Thorough research does no harm
- The timing of balance transfer is crucial. If you switch your lender in the second half of your tenure, it becomes worthless as you pay most of the interest rate in the initial stage of the loan tenure. It is better to transfer in the earlier half. That way you can avail the best rate
- Track the record of the new lender. There are several banks and financial institutions who are ready to offer lower interest rates, thanks to the rising competition in the market. Each lender has built a certain reputation in the market. So, before switching your home loan lender, learn about their services
- Check the loan transfer cost. Moving your loan from an existing lender to a new one can include additional costs such as processing fee, application fee, prepayment charges, and legal fee. In most of the cases, existing lenders only charge you for the transferring of the loan amount
- Once you move the loan, you are bound by the terms and conditions of the new lender. Surely, low-interest rates can be eye-catchy. Ensure that you earn the necessary benefit by moving the outstanding balance to a new lender
Considering the above pointers, you have to take time and make a decision as to whether you want to transfer the housing loan balance to a new lender. Understand the pros and cons of the whole process.
If it does not serve the purpose of long-term benefit, do not opt for home loan balance transfer.