A home loan balance transfer is an ideal facility that enables borrowers to transfer their outstanding home loan amount to another lender and avail of better loan terms. This is an effective means that help borrowers save on the cost of borrowing. The extent of savings on interest is completely based on the remaining loan amount, tenor, costs involved and the difference in the lending rates. However, borrowers must consider the following parameters to make refinancing successful.
Points to remember before opting for a home loan balance transfer
Borrowers must consider the following parameters before opting for a home loan balance transfer, helping them make an informed decision.
Go through interest rate credentials of new lender
Another crucial thing that borrowers must ensure to check while opting for home loan balance transfer facility is to check interest rate record of the new lenders. It will help them understand whether the new offerings will fetch them any benefits and ensure savings in the long run.
Negotiate with existing lender
Before borrowers transfer the home loan amount, they must try to negotiate with their existing lenders for a competitive interest rate. However, in order to get the upper hand during negotiation, borrowers must ensure a repayment history and a decent CIBIL score.
Renegotiating with the existing lender will help borrowers save on the cost of additional charges incurred while transferring the loan amount.
Consider Overall Cost Involved
Besides looking only for lower interest rate, borrowers must consider other charges that will be levied on them when they go for shifting the loan amount. For instance, borrowers will have to bear processing fees, inspection charges, application fees, administrative fees etc.
In addition, transfer fees are also charged to borrowers from both new and existing lenders. Hence, before looking for an alternative, borrowers must compute the overall cost involved to understand whether refinancing will eventually lead to savings or not.
Read Terms and Conditions of New Lender
Borrowers must go through the terms and conditions of the new lender. It is essential to be aware of all the particularities associated with shifting a loan amount as it will give borrowers an idea of the proportion that they will benefit from such a decision.
Choose Right Time to Transfer
Borrowers must go for a home loan balance transfer only when the remaining repayment tenor is considerable. Refinancing loan principals towards the end of home loan tenure will prove counterproductive.
To make the process of balance transfer rewarding, borrowers must opt for shifting the loan principal in the initial years. In this context, borrowers must know when to opt for a home loan balance transfer.
Check Credit Rating
Credit score mirrors borrower’s eligibility to opt for a home loan balance transfer. A substandard CIBIL score will not allow borrowers to opt for the facility. Hence, they must maintain a decent credit score.
For convenience, borrowers can also use a home loan balance transfer calculator to evaluate the benefit of transferring the outstanding loan amount.
Besides considering the above-mentioned parameters, borrowers must also know the steps to apply for a home loan balance transfer.
Borrowers can also reap the benefits of the pre-approved offers extended by new lenders on several financial products like home loans, loans against property etc. These offers ensure an expedited application process. Individuals can check their pre-approved offers by submitting their names and contact details.
A home loan balance transfer or refinancing of the existing home loan amount to another lender helps borrowers fetch lower interest rates and save a significant amount on loan expenditure and reduce EMI burden. However, before undergoing the process, borrowers must know ins and outs of the facility.