For most of us, when it comes to purchasing a home, our savings do not suffice. This is why we have to resort to financing and in which the best option is home loans as they have been designed keeping in mind the requirements of home buyers. We keep paying our EMI’s and repaying our debts but there is always better options and improvement in the current system. We might have taken Home Loan from a lender which at that point of time was providing the lower rate of interest and probably higher quantum, but we must keep an eye over the market and look for banks which are providing better and lucrative schemes for the outstanding balance transfer of the home loan. What is Balance Transfer? If due to some reason or the other, you are not satisfied with your existing lender or are getting better terms and conditions with some other lender, then you can change your lender and get your existing home loan transferred from one lender to the other. This entire process is what is known as a home loan balance transfer and provides many benefits, a few of which are as follows - Increased Tenor
Home loans are usually of a very long duration and when we opt for them, it is just impossible to foresee the expenses which may crop up in the future. As such when later our expenses increase, we wish that the repayment tenor was a bit longer so that the instalment comes down. While your existing lender may not allow you this facility, but with a home loan balance transfer facility, you can change your lender and opt for an increased tenor in repaying back the home loan. Interest Rate Reduction With any loan, including home loan, there are two types of interest rates which are available. These are - floating rate and fixed rate. In case of floating, the interest rate keeps fluctuating with the market conditions and the benefits of a reduced interest rate are passed on to the end user. In case of fixed however, the interest rate remains fixed throughout the repayment tenor. It has observed that in the long run, fixed interest rate turns out to be higher than floating interest rate. Many people do not realise this and end up opting for fixed interest rate. However, when they want to change to floating the existing lender does not allow it. Here also a home loan balance transfer can be of immense help as the new lender will once again give you the option of choosing between a fixed and a floating interest rate and you can choose the one which suits you the most. Read Also: Extending Home Loan Tenor with Balance Transfer Facility
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AuthorAman Khanna is an experienced financial advisor who is well known for his ability to foretell the market trends as well as for his financial astuteness. He has an MBA in finance from Toronto University as well as years of experience delivering seminars on sound financial practices and debt management. |