With technology instilled into finance, one can effortlessly estimate the details and benefits that would be obtained during a balance transfer of the home loan. For a home loan balance transfer, you simply need to enter the details of your existing loan. By entering these details, the calculator would be able to roughly calculate the savings you would incur by transferring your balance to another bank. Moreover, some websites also provide you with a detailed list of the banks that refinance a home loan along with the interest rates, processing fee, EMI, savings, etc.
Why avail the home loan balance transfer?
If a bank is unwilling to reduce the interest rate despite the fact that you have a pleasant relationship with the organization you can opt for a home loan balance transfer. Also, if you have been paying a higher interest rate towards a loan you can move to a bank that offers a lower interest rate. Also, before applying for a home loan balance transfer you need to clear any previous housing loan.
Home loan
A home loan is a loan availed from a bank or other financial institutions in order to finance a new home, land, to construct a property or simply to renovate an existing property. You need to clear all the documentation and verification is required to avail of a home loan. It’s not so easy to get a home loan application approved.
Home loan balance transfer
When you transfer an existing home loan from one bank to another it’s called a home loan balance transfer. Also known as refinancing, this helps an applicant avail lower interest rates and better services. There is lesser documentation involved in home loan balance transfer and it easier to obtain when compared to a home loan.
When refinancing a home loan, one must consider the processing charges and balance transfer fees included. If the new bank’s interest rate plus these additional charges still prove to be cheaper than the current loan, only then you should give a thought on refinancing the loan.
Pros and cons of balance transfer
Pros
- You get a lower interest rate as compared to the existing rate of interest
- Less repayment amount as the interest rate gets reduced
- You can save more money, get better facilities and offers at other institution
- Home loan balance transfer offers customized repayment procedure.
Cons
- The balance transfer of home loan may become a habit if done frequently
- Drop in the interest rate should not be the only reason to transfer the loan
- Transferring of the loan after 2 years is not favorable, as the maximum amount of interest has already been paid in this period
- It may pose as a trap for other financial institutions to attract new applicants to their banks.
It’s best to lower your loan repayments when you have smarter options to choose from. Move your home loan balance transfer outstanding balance to a new financial institution, pay lower monthly installments and enjoy the savings for the other things in life that really matter to you and your loved ones.