Home loan balance transfer – Why you need to do it now
by Litty Jose Finance AnalystHome loan balance transfer is the
process of transferring an existing loan to another bank or NBFC, because the
borrower is getting better rates or services there. After demonetization a lot
of banks have reduced their home loan interest rates. Leading this set of banks
is SBI who has reduced their housing loan interest rates by 50 basis points
making their current rate is 8.5 per cent. Following SBI other banks and NBFCs
too have reduced their rates, one of whom has reduced its housing loan interest
rates by 45 basis points. These rate cuts will mainly benefit new borrowers.
But this doesn’t mean that existing borrowers cannot benefit from these reduced
rates at all. This slashing of rates
makes this the best time for home loan transfer.
If you think you only have a few
years to go for your loan to be paid up and don’t really see the need to
transfer your home loan now, here are some reasons that may make you think
otherwise.
1. Savings is the main reason for transferring home
loans. You can save a lot on your EMIs if you get a reduction on your housing
loan interest. But this will only make sense if you opt for a home
loan balance transfer where the total savings in interest pay-out
is substantially higher than the cost incurred while transferring the loan.
Usually, the new lender will charge various fees, such as conversion fee,
processing fees and administrative charges during the loan transfer.
2. Transferring your home loan to a new lender is
similar to availing a fresh loan, where the new lender will have its own set of
terms and conditions. You can use it to re-set your loan EMI and tenure and top
up as well. You can opt for a home loan transfer if your existing lender is not
allowing you to reset the terms and conditions of your loan.
3. Usually banks and NBFCs provide top up loans to
existing borrowers. These are just like personal loans but their interest rates
are lower than a separate personal loan. One may require a top up in case of
funds required for an emergency or in case of a home loan for renovations.
Transfer your loan only if your current provider is not allowing you a top or
if the new provider is offering you a better rate.
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Created on Mar 28th 2018 08:27. Viewed 799 times.