For those who are unaware of what a home loan balance transfer is, it involves the transfer of an existing housing loan plan from one lender to another. Some of the most common reasons that borrowers opt for this transfer could be for a lower interest rate, a top-up loan, or even a better repayment tenure.
However, before opting for a home loan balance transfer, it is important to be aware of a few things beforehand. You need to make sure that there are no complications while going for this transfer. For this, it is important to ask the following questions:
- What are the eligibility criteria for a home loan balance transfer?
Many borrowers start researching loan plans and look for the benefits such as low interest rates and top-up loans. While there is nothing wrong with doing this, it is better to first learn about lenders’ eligibility criteria for borrowers who are looking to opt for home loan balance transfers. Being aware of the home loan balance transfer eligibility criteria puts you in a better position to know about the kind of loan plans that can be offered.
- What is the status of the existing loan’s repayment tenure?
Before opting for a home loan transfer, take a look at the repayment tenure of the existing housing loan. This is because if the tenure is in the final stages, it might not be the best decision to opt for the transfer. It is advisable to go for a loan transfer during the initial stages of the existing loan’s tenure as you can then enjoy the revised interest rate applied to a majority of the EMIs left to be paid.
- What is the cost of transferring the home loan from one lender to another?
Many borrowers think that the only charge that they pay for the home loan is the interest rate. However, there are other charges such as processing fees that lenders levy while offering the loan. The same applies to a home loan balance transfer too, which is why it is important to check with the lender about all these charges before applying for the loan. Now, after calculating all the expenses, check the amount you are saving by opting for the transfer and decide whether it is a good option or not.
- Is the revised interest rate helping in making the EMI payments easier?
Most borrowers choose to transfer their loans in an attempt to make the repayment easier. Therefore, the goal is to find a lender that offers a home loan balance transfer interest rate that makes the monthly instalments easier to pay off. Make use of a home loan balance transfer EMI calculator to check whether the revised EMIs are suitable to your budget.
Now that you are equipped with the answers to these questions, go ahead and start inquiring about a home loan transfer. Also, do keep in mind that it is best to check with the lender regarding the documents required for home loan to ensure an efficient documentation process.