According to news sources, the housing credit sector is expected to reach a growth rate of more than 18% in the fiscal year 2019-2020. The growth is especially visible in budget housing where home loans are increasingly becoming among the most popular credits availed.
The reason why these loans are becoming so popular is because of the rising price of real estate market. The sector is projected to reach $1 trillion mark by 2030.
Housing loans provide the middle and low income groups with much needed financial assistance while buying or constructing a house. As more and more people are availing loans to buy houses, it is essential for them to learn about home loan balance transfer and why is it beneficial.
Balance Transfer on Home Loans
Home loan transfer refers to the process of transferring an existing home loan from the present lender to a different lender.
Listed below are some reasons why a borrower might opt for a balance transfer to a different lender.
- Unsatisfactory service from existing lender
- High interest rates and charges with the current lender
- Monthly EMI charged by current lender is too high
- Problem with loan tenure
A home loan takeover via another lender might sound complicated but there are many non-banking financial companies (NBFCs) that have tools in place to make the transfer process smooth and frictionless. A takeover can make repaying the loan easier and faster. Therefore, one must opt for a lender that provides transfer facilities while taking a home loan. Lenders offer high-value Top-Up Loans with their balance transfer facility.
Once you understand the concept of balance transfer on home loans, it is time to understand the benefits of such a process. However, before you take a decision, you can check your details for a balance transfer from an online home loan transfer calculator.
Benefits of Home Loan Balance Transfer
Listed below are various reasons how home loan transfer saves you money and provides unparalleled convenience to the borrowers.
- Lower Interest Rates- Transferring home loans are extremely beneficial when the new lenders offers lower home interest rates on the loan. This will bring down the total cost of your loan by a substantial amount, thus, saving you a lot of money.
- Lower EMI Payments- Home loan balance transfer can lead to decreased monthly instalments. This is a huge benefit for the borrower as it reduces their monthly FOIR. It means that the borrower will be liable to pay lower EMIs on a home loan. From a larger perspective, a borrower who saves Rs. 1000 every month on their home loan with a tenure of 15 years will save around Rs. 1,80,000 on the whole tenure of loan.
- Better Service from New Lender- If you think that your current lender is not providing you with proper assistance like other lenders, you can opt for home loan takeover by a lender of your choice.
- Tenure Adjustment- You can also reap the benefits of tenure adjustment by transferring the balance of your home loan. It generally allows the borrower to increase or decrease the remaining tenure on the loan.
If you think that you can pay off the loan within a shorter period, you must reduce your tenure. This will save you a lot of cash in interest payment.
- Additional Facilities- You can decide to transfer your home loan balance to a lender that provides you with additional facilities like top up loans, part payment and foreclosure, online account management, etc. If your current lender does not have these facilities, opting for a balance transfer is the best course of action for you.
Home loan transfer is beneficial only when the new lender provides with the above mentioned advantages. Therefore, it is advisable that the borrowers must carry out a thorough cost-benefit analysis before choosing a particular NBFC.
Comparison of interest rates, policies on fees and charges on home loans of different NBFCs is a must before taking a decision about the new lender.
In case you are thinking about availing a loan, you can use an online eligibility calculator to know the maximum amount of funds you can secure.