If your EMIs are eating into your finances, a home loan balance transfer can be a good idea. Once your outstanding home loan amount is paid off by the new lender to the existing one, you can enjoy the advantages of a lower interest rate that translates into reduced EMIs. So what exactly is a home loan balance transfer? Read on.
What is a home loan balance transfer?
A home loan balance transfer means that the remaining outstanding amount (balance) with your existing lender is transferred to a new lender to save on your EMIs. The primary motive is to benefit from lower home loan interest rates.
A home loan balance transfer, also known as refinancing, is becoming increasingly common with over 20% of borrowers switching lenders to reduce their financial liability.
A Bajaj Finserv home loan balance transfer made available on Finserv MARKETS offers lower EMIs, customized repayment options, and online account access. There is 100% transparency in terms of all your dealings and you have the freedom to choose your own repayment tenure.
When to go for a home loan balance transfer?
Following RBI’s repo rate hike in June 2018, MCLR rates of banks were rising. On June 1, 2018, State Bank of India increased its MCLR by 10 basis points or 0.10% for loans across all tenures. Then again, in February 2019, the RBI reduced the repo rate by 0.25%. Punjab National Bank, Bank of Baroda and Kotak Mahindra Bank, taking a cue from this reduction, reduced their rates by 0.5% – 0.10% on March 1, 2019.
If you are a borrower who had taken a non-MCLR-linked home loan, it is likely that your home loan interest rate has remained the same. If that’s the case, you can choose to go for a MICR-linked home loan to take advantage of the reduced interest rates now. However, if you feel that a MCLR-linked home loan is unpredictable, you can transfer the home loan to a non-banking financial company (NBFC) and opt for a Bajaj Finserv home loan balance transfer at attractive terms and rates. Home loans from NBFCs and housing finance companies are not affected by the MCLR.
Benefits of home loan balance transfer-
Of course, a lower interest rate on home loan is the primary reason but there’s more.
No prepayment charges
Do you know that your existing bank is not allowed to charge full repayment charges when you transfer a home loan? But you have to pay transfer charges to the new lender which includes processing fees, lawyer’s fees, mortgage fees and other documentation costs.
While transferring home loans, some financial companies may allow you to get an extra loan or top-up loan without additional documentation. That usually happens if the real estate market value of your property increases or your outstanding amount is marginally less than the value of your property. Your current lender might not extend this offer to you. That top-up can be used to lighten your debt burden or to renovate your home or can be used for many other useful purposes.
Many financial institutions and banks float pre-approved offers based on the creditworthiness of the borrower. They also provide good discounts and gifts with such pre-approved offers that may give you a direct or indirect monetary advantage.
With Bajaj Finserv home loan balance transfer from Finserv MARKETS, you get the following advantages:
Lower EMIs with attractive interest rates
3 EMI holidays
Customized repayment options
Transparent dealings and no hidden charges
Online account access
Customized insurance schemes
When not to go for a home loan balance transfer-
Loan tenure is less
If just a couple of years are left for your home loan tenure to end, there is no point in going for a home loan balance transfer. You may find out that the costs of making the transfer is more than the advantage you will gain by transferring the loan.
Overall cost advantage
Carefully analyze all the costs involved in making the loan balance transfer. Don’t just look at the lower interest rate but calculate the transfer charges, revised repayment terms and pre-approved offers by the new lender.
Other things to watch out for include the home loan reset period and time taken for loan disbursement. Also, make sure that the loan agreement allows foreclosure and balance transfers to other lenders without penalties.
Finserv MARKETS, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. We understand that every individual is different and thus when you plan to achieve your life goals or shop for the gadget of your dreams, we believe in helping you Make it Happen in a few simple clicks. Simple and fast loan application processes, seamless, hassle-free claim-settlements, no cost EMIs, 4 hours product delivery and numerous other benefits. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere!