A home loan balance transfer is when you move your outstanding debt from one bank to another. Let’s say you’ve taken a loan of Rs.20,00,000 from Bank A, with a 10-year repayment schedule, at 10% interest. Six months into the repayment, you see that Bank B offers a quicker repayment schedule, with a lower rate of interest, and they have better customer service! You can shift your loan from Bank A to Bank B after paying some fees and charges. It’s better to shift your loan within the first half of your total repayment tenure, as you can make the most of lower interest rates this way. This means when one transfers his/her home loan, his loan account closes at the first bank and starts afresh in another bank and continues until the outstanding loan amount has been repaid. Interest rate, other charges, terms & conditions of the home loan will be based on the bank where the home loan is transferred.
How does a home loan balance transfer work?
The borrower decides on the new lender where he will be transferring his/her home loan. He then contacts the new lender and discusses the finer details of transferring the loan, and does the initial paperwork and submits the necessary documents. The bank then processes the application and determines whether or not the applicant is eligible for a balance transfer. Next, he approaches his current lending bank, carries out the paperwork to transfer his home loan account. Upon submission of necessary documents to the new lender, the new lender repays the due loan amount to the borrower’s current bank and closes the home loan account there.
The loan repayment then begins with the interest rate, processing fee, other charges, repayment terms of the new bank. The borrower then begins paying EMI to the new bank for the transferred home loan. The home loan repayment will continue for the remaining tenure. If the borrower has extended his loan tenure with the new bank, then the new tenure applies. In case of a home loan top-up plan, the terms & conditions of that would also be applicable.
Here’s when you should opt for a home loan balance transfer:
When you get lower interest rates than that of your current home loan lender
It is a good idea to look around for home loans offered by other lenders when you are repaying your home loan. We understand that it can be time-consuming and a lot of hard work to keep a tab on all of that which is why we are here to help you with it. Call Fincity customer support anytime at 080-47188010 and we will help you compare home loan plans from myriad lenders. You can pick the best home loan plan out of that where you can benefit more than your existing lender.
When you find a home loan plan that suits you and has low interest rates, it is important to check on the processing fee and other fees of the plan like transfer fees, etc. Since all the charges are applicable to the home loan you want to opt for, you will get a complete picture of how much you will have to pay apart from the EMI.
When the new lender offers better repayment terms
You can try to talk to your existing home loan provider to revise the repayment terms. Branch manager is ideally the right person to approach for this. In case you are not provided with satisfactory repayment terms with your existing bank, you can approach another bank which offers you better repayment terms. Once you approach another lending institution for a home loan balance transfer, they will explain their terms of repayment for the home loan. You can negotiate for better repayment terms.
After your discussion with them, you can carry out the home loan balance transfer process with your existing bank.
If you are not satisfied with customer support of your existing bank and find another lending that offers better customer support
Customer support is one of the most important aspects of home loan. Housing loans are a long-term commitment. There are several factors one must look at while getting a home loan – interest rate, fees & charges, repayment terms and customer support. Proper customer support is needed for home loan customers for smooth EMI repayment throughout the loan tenure.
A home loan borrower can transfer the outstanding home loan debt from one bank to another just to have a better banking experience, as home loans are generally a 10-20 year long commitment.
To get a home loan top-up plan
Some banks offer top-up loans to cover any additional expenses a borrower may have while constructing. One can take a top-up loan for additional expenses on the property. It can be for furnishing, repair, or extension of house. SBI bank offers top-up home loan even for personal expenditure. This is a huge plus considering the fact that interest rates on the top-up loan products are lower when compared to personal loans.
If your existing home loan provider does not offer a top-up plan when you need it, you can find another lender who will offer the same for you.
Now that you know when you can opt for home loan balance transfer, are you looking to process it for your home loan? We’ll make the process simpler for you. Reach out to us using the chat button on your screen.