Home loans have become one of the most sought-after non-food credits in the Indian financial market in recent years. A growing number of first-time and existing homeowners prefer availing a credit to purchase a new property instead of utilizing their savings.
Borrower-friendly features like home loan balance transfer make these types of credits even more affordable. A balance transfer allows you the provision to switch from one lender to another and to seek the lowest interest rate available in the market on the remaining principal amount of the loan.
There are several advantages of availing a balance transfer on your home loan. Let’s take a look at some of them.
- It lowers the interest rate – Balance transfer is one of the most common and easiest ways to lower home loan interest rates. You are likely to hand over the remaining principal amount to a lender who offers lower interest rates.
It is possible because the policies of the Reserve Bank of India is instrumental in deciding the lowest possible rate a lender can charge you, named as the MCLR. Financial institutions themselves decide the upper limit. In this competitive Indian financial market, you can easily go for a lender who offers lower rates and apply for a home loan balance transfer.
- It offers top-up loan – Many financial institutions offer top-up loans during balance transfer. It can be very useful if the total cost of reconstruction has exceeded your previous estimates.
Current lenders are unlikely to increase your line of credit unless the price or market value of your property increases. That can put you in severe financial stagnation as you might not have any funds left to complete the project.
During a home loan balance transfer, the new lender will consider the present market value of your property as a benchmark. It will increase the limit, giving you a higher line of credit.
- It comes with insurance solutions – You can opt for an insurance scheme to protect your property/s and/or your family. You can add the premium to the restructured new EMIs after the loan transfer. Many financial institutions offer customized insurance policies, tailor-made to mitigate your unique personal requirements. You can avail one with minimum additional charges during a transfer.
- Minimum charges – Balance transfer on the home loan usually comes with affordable, or zero additional charges levied on the customer. You can part pre-pay or foreclose the line of credit without any additional fee, and enjoy a transparent process without any hidden charges when you opt for a home loan balance transfer. It helps you save a significant amount on the total payable sum.
Moreover, you can also use various online tools like a home loan EMI calculator to plan your finances better. Calculate the EMIs you are liable to pay after the loan transfer.
There are several benefits of availing a balance transfer on your existing home loan. Carefully consider the available options and select a financial institution that offers the best benefits.