Home loans are indeed a long-term commitment with tenures stretching up to years. During the period of a home loan, market conditions change and interest rates fluctuate. If it so happens that lending rate dips significantly compared to when you availed your home loan, you can take advantage of the situation with a home loan balance transfer. Thisallows you to transfer the entire unpaid principal amount of your home loan to a new lender offering a more favourable rate. Sometimes, it even makes sense to avail a home loan balance transfer for improved service. Let’s take a look at the benefits of home loan balance transfer in detail.
1. Reduced Interest Rate
A home loan involves high principal amounts and long tenures. Thus, even a tiny interest rate difference can impact the final EMI in a big wat. When you make a home loan transfer, you can save a major chunk of interest cost for the remaining tenure of the loan. Do note that this benefit of a home loan balance transfer is more pronounced during the initial years of a loan as opposed to the later years.
2. Reduced EMIs
Reduced interest rates on a housing loan translates to reduced equated monthly instalments. Lower EMI payments spell good news for borrowers who can now save a substantial sum every month. A home loan balance transfer calculator can give you a fair idea about changes in EMI payments, which can also help you plan your finances better.
3. Flexible Tenure
A home loan balance transfer gives the borrower a chance to negotiate repayment tenures afresh, since a new lender is now involved. You can use a home loan balance transfer calculator to determine the payment period that works best for you. With lower EMIs and proper financial assessment, you can even pay back the home loan in a shorter duration.
Additional Read:- What Is a Home Loan Balance Transfer?
4. Availability of Top-Up Loan
Often, a lender will offer a top-up loan with a home loan balance transfer, that too at attractive rates. A home loan top-up increases the loan amount and can be used for activities related to home or otherwise i.e, personal needs.
5. Improved Credit Scores
Another clear benefit of home loan balance transfer is that it can lead to improved credit score in the long run. With lower interest costs and reduced EMIs, a borrower is in a better position to make monthly repayments and service the loan. With a good track record of repayment, your credit score can improve in the long run.
6. Improved Services
When you take a balance transfer loan with a new lender, it may sometimes mean an improved customer experience. Especially if you’re getting better services, quick and simple processing, along with a lower interest rate, you can definitely make the switch.
Additional Read:- Tips to Reduce Home Loan EMI
Home loan balance transfers can help borrowers save a good amount of money. An in-depth cost-benefit analysis is important to ensure that you do not end up paying more with your balance transfer loan. At Tata Capital, availing home loans and home loan transfers is quick and hassle-free. Get in touch with us today to know more.