Attributing to lower interest rates and affordable repayment terms, home loan applications have witnessed an increase of 25-40% across major cities in 2021. To further increase the affordability of housing loans, existing borrowers can opt for a Home loan in Ahmedabad transfer.
Interested candidates can switch their existing loans to another lender, promising competitive interest rates against easy eligibility parameters.
What are the benefits of a home loan balance transfer?
The facility of a home loan balance transfer brings forth a host of benefits, which include:
- Lower interest rate
The primary reason behind borrowers opting for this facility is lower interest rates. They get to choose a lender offering a lower home loan interest rate, which substantially lowers the EMIs, affecting the overall affordability of the loan.
- Enjoy part-prepayment facility
Part-prepayment enables a borrower to pay off a loan principal partly. This facility lowers the monthly instalments and also reduces the repayment tenor. In simple words, a part-prepayment facility helps one save in the interest component.
Specific lenders may not allow this facility. Hence, during such situations, borrowed opt for another lender offering this facility.
- Top-up loan
Several financial institutions offer top-up loans when an individual opts for a home loan balance transfer. One can utilise this loan amount to meet several expenses without any end-use restrictions.
Factors to consider before opting for a home loan balance transfer
With so many lucrative benefits, existing borrowers servicing a home loan may consider transferring their existing loan accounts to another lender offering a lower interest rate. Such borrowers must consider these factors:
- Calculate overall interest savings
Home loan balance transfer requests are treated as fresh loan applications. Hence, financial institutions tend to levy processing fees and several other charges associated with its application. As a result, those considering opting for this facility must weigh their savings regarding interest components after paying all these charges.
- The remaining tenor of the existing loan
Opting for a balance transfer during the later stage of a home loan is not beneficial. This is because a substantial amount of interest is paid off during the initial tenor of the loan. So, transferring the loan account during the later stages will not leave much scope to save on interest.
It is also advisable that borrowers keep the new tenor of their home loan the same as the remaining tenor of their existing loan. This is because choosing a longer repayment tenor will result in more interest. In this regard, only those individuals looking to reduce their EMIs significantly can opt for a longer loan tenor post balance transfer.
- Renegotiation of interest rate with the existing lender
Before you apply for home loan balance transfer, consider talking to your existing lender regarding the interest rate. As mentioned earlier, a home loan balance transfer application is treated as a new application by lenders. Therefore, a borrower has to undergo various steps, including property evaluation, loan eligibility, and more.
All these steps can take up a borrower’s effort and time. Hence, one can negotiate the interest rate of their existing loans with the lender before opting for a balance transfer.
After considering these factors, a borrower must choose a lender that provides the most lucrative home loan offer. For instance, several financers in India extend pre-approved offers against financial instruments, such as home loans and loan against property. These help in simplifying the loan application process. Individuals can check their pre-approved offers within seconds by filling in a few basic details.
What is home loan balance transfer eligibility?
The parameters to obtain a home loan balance transfer facility slightly differ from the home loan eligibility criteria. Mentioned below are a few parameters that lenders consider before approving balance transfer applications:
- The property must be an occupied or ready to occupied property
- The applicant must have paid more than 12 EMIs
- Borrowers must not have any outstanding dues regarding their existing loan
These parameters are subject to change depending upon the lender. Thus, one must check the lender specific eligibility before applying for a balance transfer.
What are the documents required to opt for a home loan balance transfer?
Lenders specifically ask applicants to submit their KYC documents (identity and address proof). In addition to this, there are some other documents that applicants must submit. They are:
For salaried applicants:
- Recent salary slips for Form 16
- Previous 6 months’ bank account statement
For self-employed applicants:
- Previous two years’ financial statement of the business
- Business continuity for 5 years, including a proof for the same
Only after keeping these documents handy should one apply for a home loan balance transfer.
Further, with proper knowledge about a home loan balance transfer, individuals can choose the right time to transfer their loans to a lender offering affordable borrowing with a lower interest rate.
Read Also: Home Loan at Lower Interest by Maintaining Your Credit Score
