Several financial institutions offer home loans accompanied by various benefits and facilities. Thus, while opting for a home loan, individuals should conduct a comprehensive market comparison to finalise a financier offering maximum benefits. A home loan balance transfer is one such benefit that allows borrowers to maximise their benefits via the lowest interest rates.
Borrowers refinance their home loans with another lender via a home loan transfer facility to opt for several other benefits as well.
Here are some important benefits of transferring home loan balance –
Benefit of lower interest rates
One of the most crucial reasons for a home loan balance transfer is to avail lower interest rates with another financier. The applicable interest rates on the loan decide the monthly payable amount. Thus, higher interest rates lead to sizeable EMIs. As home loans come with a substantial borrowed amount, a smaller variation of interest rate can also accumulate a significant difference in the payable amount.
Thus, when individuals find out lenders that offer lower interests, they are likely to switch their loan account with the new financier. This way, borrowers can cut down their chargeable interest rates, which helps to bring down the EMIs.
Advantages of a trend of reducing lending rates
While opting for home loans, individuals can decide between fixed and floating interest rates. Depending on several economic aspects, the RBI determines the basic rate, and financial organisations decide the floating rates. The floating rates can be altered after each quarter.
However, fixed interest rates are predetermined rates of interest at the time of loan issuance by financers. Thus, after assessing present market conditions, if individuals find the basic rate can remain constant or reduce, they can opt for a home loan takeover and change to a floating rate. Also, borrowers can also opt for a fixed rate of interest at a lower margin offered by another lender.
Nonetheless, selecting between these two options can be tricky as it includes an individual’s monthly obligations. Thus, borrowers need to have a thorough understanding to choose between floating and fixed interest rates.
A chance at improved financial management
Home loans come with substantial EMIs for a longer period. Thus, borrowers can find it challenging to manage their finance and meet other set goals. However, individuals can always look for different financiers that provide home loans at affordable interest rates. By refinancing with such lenders, individuals can reduce the total payable amount.
With money saved significantly, borrowers can assign their monthly income to multiple financial goals with ease. Such prudent decisions can help to grow their wealth as well as repay the loan amount with ease. Nonetheless, before switching to other lenders, individuals can use the eligibility calculator dedicated to a balance transfer to estimate benefit quantum.
Improved financial stability
Financial stability of individuals is likely to change during the repayment tenors. Either increment or decline in income can affect the repayment capacity of borrowers. If individuals’ monthly earnings cutback or any additional financial accountability exists, they can opt for reduced EMIs by extending the repayment tenor through loan refinancing.
Contrarily, if monthly earnings have increased, borrowers can look for higher EMIs by declining the loan tenor. That means, by availing home loan balance transfer, individuals can repay the entire home loan sooner.
Nonetheless, this process may require further assessment of present financial position to ensure the new payment capability. Thus, individuals can use a home loan transfer calculator and check all possible repayment options to select the right one.
Top-up loan advantage
Individuals who need further financial help can also opt for a home loan balance transfer. By obtaining the facility, borrowers are also allowed to get a top-up loan facility, incremental funding for additional financial needs.
For example, if borrowers have already availed a home loan and after repaying for a certain period require further funding to meet their other financial requirements, they can opt for top-up loans by refinancing the existing loan.
Moreover, a top-up loan comes with no limitation to end-use. That means, whether for decorating the home or buying a car, individuals can utilise the top-up loan amount as per their needs.
Several financial institutions also come with pre-approved offers to facilitate borrowers with the easy loan approval process. Other than home loans these offers are applicable on loans against property, among other financial products. By submitting names and mobile numbers online, applicants can check their pre-approved offers.
As for managing the advance, individuals should always prioritise and regularise their loan repayment. With a default in repayment history, borrowers may not be eligible for a home loan balance transfer. So, candidates should know everything about a loan balance transfer beforehand.