How does A Home Loan Balance Transfer Work?
Many people dream of having a house which they can call as own. Affording a dream house can be difficult for one as the price of the houses have reached sky high.
When it comes to buying houses, people often opt for Home Loans. A Home Loan can help one fulfill his dream of owning a house of their own. House Loans are preferred by many people in India. The interest rates offered on a Home Loan can differ depending upon your loan amount as well as the loan tenure that you are opting for. It’s important that one investigates about the loan interest rates offered by banks as banks charge different interest rates for the same amount.
After the demonetization, the interest rates on Home Loan have gone down. The people who are planning to take a Housing Loan can benefit this discount on their Housing Loan interest rates. These interest rates are offered to the ones who are opting for a new Home Loan. This news can be a bit disappointing to the ones who are already an existing loan borrower. They still have to pay the old interest rates which can be high to them compared to the interest rates which are changed after demonetization. In such a case you can go for transferring your loan.
- What is a Home Loan balance transfer?
Now one might go for a Home LoanBalance Transfer if he feels that his bank is charging higher interest rate compared to other banks. Also, you can go for a Home Loan balance transfer if you have borrowed loan before demonetization. Many go for House Loan balance transfer when they find a bank which charges a low-interest rate on the same amount. You can either transfer your loan to another bank or choose another loan scheme of the same bank.
By using Home Loan balance transfer you can benefit with a low-interest rate. Opting for a low-interest rate will help you save some funds as you would have had to pay more if you had a higher interest rate. When you opt for a Home Loan balance transfer the entire loan amount is transferred from one bank to another. The new bank that you have opted for will charge you a low-interest rate plus the loan tenure also will be short.
- Are there any benefits of balance transfer?
When you are going for a Home Loan Balance Transfer it is important to remember that you can only transfer your loan under certain circumstances. There is no such guarantee that your bank will allow you a loan transfer. Also, there might be a possibility that banks may ask you to pay some processing fee. Plus it’s not necessary that the bank which is offering you a low-interest rate may not charge a processing fee.
You might also be charged a penalty amount if you are going for a Home Loan balance transfer. If you have a short Home Loan tenure remaining then it will be wise if you don’t waste your time in transferring your loan to another bank. The loan transfer may take time which can increase your loan tenure if it’s on the verge of ending. If you still have a long period left you can surely go for Housing Loan balance transfer.
Before going for a Home Loan balance transfer it is important that you consider the above points. While Home Loan balance transfer is an option available to many, whether it's good or bad completely depends on your current situation.