Home Loan A home loan balance transfer becomes necessary when you are unsatisfied with the home loan interest rate your current lender offers. It is also a smart alternative if you require a top-up loan as well.
A home loan balance transfer allows you the perks of being with a new lender, which include the possibility of a relatively low home loan interest rate, with the subsequent reduction in EMI or tenor. Even a one percent difference between your old interest rate and the new one can amount to a substantial difference in terms of the actual interest outflow. Thus, a marginal reduction in the interest rate can lead to significant savings, making the loan that much more affordable.
The balance transfer process involves moving the loan amount from your existing lender to the new lender, allowing you to sidestep the increasing home loan interest rates. Your new lender will likely offer you a more competitive interest rate on your existing loan, based on eligibility. Also, when you opt for a home loan balance transfer, you can negotiate for better terms and conditions.
A borrower should also consider the home loan balance transfer option if they no longer like the customer service they receive from their current lender, or if they’re unhappy with the additional fees and charges levied, especially if there’s a lack of transparency. Dealing with a new lender minus these pain points definitely allows for a better business relationship.
There is no reason to believe that securing a loan from one lender is the end of it. If your current home loan is negatively impacting your finances – looking for a better lender, who offers better terms, is a valid option.
5 Things to Consider before You Opt for a Home Loan Balance Transfer
As a borrower, not only do you need to think of low-interest rates and the prospect of a better lender, you must also consider other equally crucial elements. Read on to find out which five things you should be looking at.
1. Negotiate for a lower rate of interest
Depending upon the existing market conditions, try and negotiate for the lowest possible interest rate. The interest rate applicable in your case will depend on a number of factors, including the property in question and your income profile and credit history, among others. The process can become far smoother if you have an existing relationship with the new lender, such as with a previous credit.
2. Leverage your credit score to negotiate the best terms
A good credit score is a testament to your creditworthiness, and the value of a high score cannot be emphasized enough. As an applicant with a strong financial profile and a CIBIL score higher than 750, you have the choice to pick from the best lenders. Leverage this parameter to negotiate for the best possible borrowing terms. Of course, this works only if you have a spotless credit history, so it’s imperative you do not default on your existing loans.
3. Home loan balance transfer fees
The home loan balance transfer process entails a set of fees and charges, including processing fees, legal and technical charges, stamp duty, and other government charges such as MOE and MODT, which may vary from state to state. Thus, before applying for a home loan balance transfer, make sure you check that the cost of the transfer doesn’t outweigh your savings from interest.
4. The new lender’s terms and conditions
It pays to study the new lender’s terms and conditions before agreeing to the home loan balance transfer. To save yourself the trouble of entering a contract that will hurt your finances, familiarize yourself with their terms. This helps you evade unpleasant surprises, such as hidden charges. We recommend that you do your due diligence before going ahead with your home loan balance transfer with a new lender.
5. Your loan tenor
If you’re nearing the end of your home loan tenor, then it makes little sense to apply for a home loan balance transfer. Additionally, if you plan on selling the property for which you’ve taken the loan, it is not advisable to seek a balance transfer for the same. The only way around it would be to get a top-up loan, thereby increasing your loan tenor with your new lender.
Reasons to Choose a Home Loan Balance Transfer
A home loan balance transfer is beneficial for many borrowers, and many make a compelling argument for it. Here are some reasons why you should consider a home loan balance transfer.
- You hold the liberty to choose how to service your loan, after the balance transfer – be it through smaller EMIs with the same loan tenor, or through the same EMI amount over a shorter tenor.
- Choosing to borrow from a new lender of your choice also holds the promise of a better customer relationship, ensuring better support services.
- When you apply for a balance transfer, you have a good chance to benefit from the low home loan interest rate your new lender will offer. A lower rate of interest will reduce the total interest outflow, thereby making it easy for you to service the loan.
Apply for the Bajaj Housing Finance Home Loan Balance Transfer Today
A balance transfer is a good way to get more out of your home loan, but we ask that you consider the mentioned factors before making a move. Bajaj Housing Finance’s Home Loan Balance Transfer offers a number of benefits, right from an all-time-low interest rate starting at 6.75%* for salaried applicants and professionals to quick processing and disbursal, doorstep service, customized repayment options, 5,000+ approved projects, and external benchmark linked loans.
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