Home Loan Balance Transfer enables a customer to transfer existing home loan from one bank or housing finance company (HFC) to another bank or HFC on better terms. The main condition for Home Loan Balance Transfer is that the borrower should satisfy the eligibility criteria for availing home loan as per the new bank's guidelines and he should have a good repayment track record which means that he should have serviced EMIs of the existing home loan without any gap. Balance transfer of home loan is almost equivalent to availing a new home loan.
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As you transfer your home loan on better terms, your home loan EMIs would reduce and that will be your savings. Moreover, you can enjoy the benefit of top-up loans, nil prepayment charges, etc. from the new lender.
Mentioned below are the major benefits of home loan balance transfer:
This is the major benefit that you will receive on home loan balance transfer. Comparatively lower rate of interest is offered by the new lender and that is why you refinance your home loan from the new lender. It will result into lower future EMIs.
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Due to reduced rate of interest you can get the benefit of reduced EMIs on the same loan amount.
If you do not wish to pay lower EMIs, you can go for reduced repayment period.
Generally, you will be offered top-up loan facility along with home loan balance transfer by the new lender. If you avail that facility, you will get additional funds in your hand which you can use in any other thing such as education, wedding, etc. The main advantage is that it will be available at lower interest rate just like original home loan.
You will get the facility of prepayment of part-payment of your home loan at nil charges. If you encash this option then it will lower your EMIs or will reduce the loan repayment period.
Before availing home loan balance transfer, you should consider all the benefits and other services offered by the new lender which are not there with the existing lender. If you find home loan balance transfer more beneficial, you must go for it.
It is also to be noted that majority of lenders allow this transfer only after a certain period of time for example after 2 or 3 years. Lastly, the decision of home loan balance transfer should be taken carefully after considering all the required things and not in a hurry.
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