How to go about a balance transfer of your home loan

Taking a home loan is perhaps the biggest financial decision you are called upon to take. Even though you may have spent a considerable amount of time researching about your home loan and are prepared to take on long term debt, there is no harm in wanting to get a better deal even when you are paying off a home loan. This is where a home loan balance transfer comes into picture.

Simply put, a home loan balance transfer is the process of transferring your unpaid balance of your existing loan from one lending institution to another. You can avail of a home loan balance transfer offer only after you have a track record of repaying your home loan for a minimum of 12 months. By transferring your home loan, you can not only save up money that goes towards the repayment of your credit, it may also be availed of if another lender is offering you better repayment terms and services.

Here are some compelling reasons to avail of a home loan balance transfer:

Lower rate of interest- A lender different from your existing one is offering an attractive rate of interest. The difference in the rate of interest  ranges from 0.25-1% and brings down your EMI amount or loan tenure considerably. The rate of interest for a balance transfer on a home loan is currently hovering around 8.5-9%.

Better facilities and services– A home loan balance transfer can be considered if the new lender is offering better facilities such as higher number of bullet prepayments or prepayments in bulk amount as and when it is convenient. The new lender may also offer other facilities such as a higher top up loan, in case you are in sudden need of funds.

No hidden charges– A home loan balance transfer will only make sense if the new lender does not charge you anything apart from a nominal processing fee.

The process of a balance transfer

Although there are a plethora of lending institutions offering a balance transfer facility of home loans, the process of getting one is almost as elaborate as taking a home loan for the first time. Here are the steps you will need to go through if you are considering a balance transfer.

Submission of identity and income proof

Your new lender will require you to submit your identity and income proof, so you will have to be prepared with the documentation.

Your property papers

Finally, you will have to make an application to your existing bank to release the property papers that they hold after the transfer of the balance amount of your home loan. The new bank carries out its own technical and legal evaluation of your property as per standard rules and keeps a record of same.

In conclusion, it is fair to say that you must do a cost benefit analysis before you consider a balance transfer of your home loan. Consider all the fees and other charges you will pay against the amount of money you will save. Also bear in mind that the transfer cost has to be borne immediately whereas the savings will be spread over a longer tenure. If you still feel that a home loan balance transfer will be beneficial to you in more ways than one, we at #RuLoans will be happy to provide you all the assistance you need.

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