Home loans are big-ticket and long-term expenses that majorly impact an individual’s lifestyle. It is, therefore, crucial that home loan borrowers choose a lending partner who can be trusted to have a customer-centric approach and who continually works towards building happy customers. It is also equally important that a borrower avail of their home loan on terms and conditions that work best for them.
Home loan EMIs easily go on for 20 years, sometimes even 30, and such a long commitment can easily become tiresome and highly stressful if one opts for EMIs one finds difficult to afford or repay. Similarly, some people do not want to live with the burden of EMIs for more than a few years and want to become debt-free as quickly as possible by either paying the entire amount due or shortening one’s loan tenor. Whether you want to reduce your loan EMIs or shorten your loan tenor, you will find the home loan balance transfer facility to be highly favorable.
Home loan balance transfer refers to the process of transferring the remaining balance on one’s home loan from their current lender to another offering better loan terms and conditions. While most homebuyers and home loan borrowers opt for a home loan balance transfer to benefit from a lower interest rate and therefore, reduced EMIs, some people also opt for a home loan balance transfer to shorten or elongate their loan tenor or switch their home loan to a lender known for delivering better service. This article discusses the benefits of a home loan balance transfer and looks at how a home loan balance transfer empowers borrowers.
Here’s How a Home Loan Balance Transfer Can Empower You
1. You Can Reduce Your EMI burden by Availing of a Lower Home Loan Interest Rate
Most home loan borrowers opt for a home loan balance transfer as it allows them to reduce their EMI burden. As mentioned before, since home loans are a long-term commitment, paying exorbitantly high EMIs, or EMIs that feel heavier on the pocket, can make one feel financially and mentally drained.
Thus, it is not surprising that a few years into repaying their loan, almost all home loan borrowers start looking out for lenders willing to offer them a loan at a lower rate of interest. Lower home loan interest rates help reduce the EMI burden. Borrowers who transfer their home loan to another lender to benefit from lower home loan interest rates but do not reduce their EMIs are able to reduce their loan tenor and become debt-free sooner.
2. You Can Become Debt-free Sooner or Reduce Your EMI Burden by Changing Your Loan Tenor
A home loan balance transfer also empowers home loan borrowers by giving them the option to change their loan tenor to suit their needs. Borrowers who are struggling to pay their current EMIs can extend their loan tenor. This will help them reduce their EMI burden and bring their EMIs into the affordable range.
However, one must keep in mind that extending the loan tenor also increases one’s total interest outgo. Therefore, the decision to extend one’s home loan tenor must be taken after proper consideration and planning. On the other hand, borrowers who can afford to pay slightly higher EMIs can reduce their loan tenor. This will not only help them become debt-free sooner but also reduce their total interest outgo.
Borrowers must have a clear idea of what they wish to achieve through a home loan balance transfer. Having a clear goal will make the whole process more fruitful and smooth.
3. You Can Also Avail of a Top-Up Loan to Take Care of Additional Responsibilities
Home loan borrowers planning to switch lenders must know that when they apply for a home loan, they will be given the option of availing of a top-up loan. Top-up loans offer several benefits. These loans come with zero end-use restrictions – borrowers can use the money to fulfill all kinds of personal and professional needs. Further, the interest rate on these loans is quite low and the loan comes with a long and flexible repayment tenor, which further eases the burden of loan repayment.
So, if you want to start a business consolidate debt, or need money to take care of an ailing parent, you must go ahead and avail yourself of a top-up loan. However, do keep in mind that a top-up loan will increase your EMI burden. So, you must opt for a top-up loan only if you are prepared to pay higher EMIs.
4. A Home Loan Balance Transfer Allows a Borrower to Benefit from Better Service
These days, lenders entice home loan borrowers with beneficial home loan terms and conditions, such as low-interest rates and higher loan sanctions. Unfortunately, once a client is on board, they forget all the promises they have made.
The home loan balance transfer facility empowers home loan borrowers by giving them the option to switch lenders and move their loan account to another lender if they are not happy with their current lender’s services. The facility also keeps lenders on their toes and inspired to offer good service and retain all existing customers.
Final Words
The home loan balance transfer facility can prove to be highly beneficial. However, one must keep in mind that a home loan balance transfer attracts a fee and therefore, one must opt for this facility after weighing in all the pros and cons and performing a thorough cost-benefit analysis.
Further, one must also know that lenders treat all home loan balance transfer applications as new home loan applications and therefore, one must apply for a balance transfer only if one meets their preferred lender’s eligibility requirements. Further, maintaining a good credit score and a stable job and income will certainly work in your favor and help you avail of better loan terms and conditions when you opt for a home loan balance transfer.
