Why pay more when you can pay less? A home loan balance transfer can help you grab better deals; you might have missed initially.
Have you ever bought something for a price only to find out you could have gotten it cheaper at another shop? It sucks but you get over it. After all, it is only a few bucks costlier and the fact that you got what you wanted matters more. But this kind of thing is hard to shrug off when it comes to bigger expenses such as home loans!
Let us tell you a story about two friends. We’ll call them Ankur and Vikrant. Ten years back, Ankur applied for a home loan of INR 30 lakh and got it at an interest rate of 13.5%*. Whereas, his friend, Vikrant applied for a home loan of the same amount, INR 30 lakh, this year, and got it at an interest rate of 10%*.
Now, you must be thinking that Vikrant might have negotiated better or had a better credit score that got him better interest rates, which, in fact, could be a factor. However, did you know that the government had also announced rate cuts, bringing down the home loan market prices, or that Ankur still has a chance of benefitting from the reduced interest rates? All Ankur needs to do now is apply for a home loan balance transfer to take advantage of the lower interest rates.
Most people keep paying higher interest rates just because they are not aware of this very practical option. So, let us clarify what exactly a home loan balance transfer is and how does it work?
A home loan balance transfer is an option that allows borrowers to switch their loan contract from one lender to another offering lower interest rates.
The new lender pays the outstanding principal amount to the current lender. After this, the current lender hands over the property documents and a no-due/objection certificate to the new lender. In this process, the old home loan account is closed and a new one is opened with the lender of one’s choice.
A chance to avail ‘lower interest rates’ is the most common reason why people choose to transfer their home loan balance. But it can help you leverage other added benefits like availability of top-up loans and the freedom to customize repayment options too.
Here’s a closer look at the benefits:
- Lower Interest Rate Alternatives: In the present scenario, you can avail a home loan balance transfer at an interest rate as low as 8.90%* with nil processing fees*.
Since home loans are long-term loans for tenures of upto 30 years, opting for an alternative that allows you to pay lower interest can help you save up a huge amount of money. Suppose you have paid 15 years’ worth of your loan amount at an interest rate of 10%* and you still have an unpaid principal of say INR 25 lakh. Now, if you switch to another lender that offers an interest rate of 9%*, you could gain a benefit of 1%* on the loan amount taken.
- Customized Repayment Options: Since a home loan balance transfer is equivalent to applying for a new loan, you have the chance to negotiate better repayment terms with your new lender. For instance, along with a lower rate of interest, you may readjust your EMI and tenure terms as well. Do you want to pay off your loan early? Ask for a higher EMI and shorter tenure option. Similarly, if your previous EMI option was stressing you out financially on a regular basis, you can negotiate and reduce your EMI to fit your budget.
- Supplementary Top-Up Loan: Many lenders offer a top-up loan in addition to your home loan balance transfer to make the offer more lucrative. You can avail this additional loan at a competitive rate and on your terms. Use this top-up loan to make part pre-payment of your current debt, pay off other smaller debts, use it to renovate your home or however and wherever you like.
All in all, it can reduce your financial stress and make your home loan debt more manageable. So consider a home loan balance transfer now or get your doubts cleared if any, just call 022-67136713. Our helpful advisors are happy to assist you on any queries whatsoever.