When it comes to buying a house, it is natural to immediately think of a home loan. This is because real estate prices can go quite high, and a home loan can help in covering the finances required for the property purchase. Now, while choosing a loan plan, a borrower considers numerous factors such as the loan amount, the interest rate being offered by the lender, and the repayment tenure for the loan. Now, lenders keep updating the terms on their home loan plans to attract customers. However, does this mean that existing borrowers cannot enjoy the terms being offered to the new ones? Of course not!
This is where a home loan balance transfer comes in. This involves transferring the outstanding loan amount from one lender to another for better terms. The debt existing with the current lender will be paid off by the new lender, thus completing the transfer. You can then start paying off the revised EMIs to the new lender.
If the idea of a home loan balance transfer sounds profitable, make sure to keep the following things in mind to ensure a hassle-free process:
- Be aware of the documents required
There have been a few borrowers who have complained about lenders’ documentation processes. However, if you are aware of your lender’s specific requirements when it comes to the documents required for home loan balance transfer, this process should be simple. These would include KYC documents, financial documents, address proof, property documents, letter of consent, and so on.
- Take a look at the charges involved in carrying out the transfer
Some borrowers make the mistake of thinking that the only expense of the home loan is in the form of its interest rate. However, it is also important to focus on certain charges that lenders might levy on transferring the home loan, such as administration fees, processing fees, or application fees. Make sure to calculate these expenses while determining the overall cost of the transfer.
- Use a home loan balance transfer EMI calculator
Before taking any loan, it is important to first make sure that its monthly instalments can be paid off without any difficulties. While opting for a home loan balance transfer, you need to know that the revised EMIs are suitable. This is why it is advisable to make use of a home loan balance transfer EMI calculator. This will help in understanding whether the revised terms are helping with the loan’s repayment plan.
- Focus on the home loan balance transfer interest rate
While applying for a home loan, one of the most important factors that borrowers focus on is to get an attractive interest rate. This is because the interest rate plays a big role in determining the loan’s monthly instalments as well as its overall cost. So, while transferring the loan, make sure to focus on the home loan balance transfer interest rate.
Therefore, these are some of the things that you need to keep in mind before going for a home loan balance transfer. Also, do keep in mind that refinancing your home loan is better when a major part of the loan is left to be repaid.