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Why should you select a balance transfer for your home loan?

Choosing a balance transfer on your home loan might be advantageous and affordable for you.

The current level of home loan interest rates is the lowest in many years. If you are still making your EMI payments on your house loan at the old rate, it is time for you to apply for a home loan balance transfer.

 

What is a balance transfer on a mortgage?

 

Switching banks is required for a house loan balance transfer in order to receive better terms, a lower interest rate, and other advantages.

 

High-interest rates have a direct impact on your finances and may prevent you from achieving financial success. Being heavily indebted could also be distressing. If you foreclose on your mortgage before the tenure period has ended, that may be your only option for survival.

 

Not everyone, though, is able to foreclose on a significant debt with ease. In this case, choosing a balance transfer on your home loan might be advantageous and affordable for you.

How does transferring a balance operate?

 

Your existing home loan’s outstanding balance is transferred to a new lender during a home loan balance transfer. Additionally, the new lender provides you with funds to repay your prior loan.

 

For this, the borrower must submit an application to both his current lender and a new lender requesting a balance transfer. If the new lender approves the house loan, the remaining balance will be paid to the present lender, and a new loan account for the same amount will be formed with the new lender.

 

Not everyone, though, is able to foreclose on a significant debt with ease. In this case, choosing a balance transfer on your home loan might be advantageous and affordable for you.

 

How does transferring a balance operate?

Your existing home loan’s outstanding balance is transferred to a new lender during a home loan balance transfer. Additionally, the new lender provides you with funds to repay your prior loan.

 

For this, the borrower must submit an application to both his current lender and a new lender requesting a balance transfer. If the new lender approves the house loan, the remaining balance will be paid to the present lender, and a new loan account for the same amount will be formed with the new lender.

 

The property documents must be released and a no-due certificate must be sent to the borrower as soon as the current lender gets the late sum.

 

The borrower is required to deliver all of this supporting documentation to the new lender and make all outstanding EMI payments at the rates set forth by the new lender.

 

Benefits of transferring your mortgage balance

Reduce the EMI and interest rate.

One of the primary justifications for selecting a home loan balance transfer is the reduced home loan interest rate.

 

When you are paying a higher interest rate on your loan and other lenders are offering the loan at a cheaper rate, opting for a balance transfer works in your favour and helps you to convert your loan to the lower rates with a new lender. Your EMI is further reduced as a result, saving you a significant amount of money each month.

 

Helps you obtain a loan with better terms.

 

For their loan options, several lenders offer a variety of terms. If you have taken out a home loan with unfavourable conditions, you may also benefit by shifting your loan to a lender who is offering the same loan at terms that are more favourable to you.

 

Charges for prepayment and foreclosure

 

In a 2012 directive, the Reserve Bank of India outlawed foreclosure costs for mortgages with floating interest rates.

 

Banks may, however, impose a par-closure fee that can vary from 2% to 4% of the outstanding debt on mortgages with fixed rates of interest.

 

Therefore, borrowers who want to prepay or foreclose on their house loan and are paying a floating rate of interest should without a doubt do so.

Conclusion

One excellent strategy to lessen your debt and EMI stress is to transfer the remaining balance of your house loan. Transferring your home loan balance can also help you get better loan conditions, a top-up loan, a lower interest rate, and occasionally, specially tailored offers.