Exactly a decade ago, home loan interest weren’t exactly the same as they are now: buying a home using a loan was quite an expensive task with people having barely enough to afford their livelihood comfortably. This goes without saying for people who even thought about buying a property in 2008 - the year of Great Recession when Indian trade sector had almost collapsed, and people were losing their jobs. On contrary to that, home loan interest rates are much lower. In fact, the interest rates are the lowest compared to the previous decade or even previous year.
Besides, housing loans offered these days are in accordance with MCLR lending system which dictates banks and NBFCs to offer the lowest rates possible. Therefore, there are chances people who took a home loan before (when the rates were soaring high) would be in the lookout for tips and tricks to reduce their obligations. For them, the Indian banking and finance sector has home loan balance transfer which, as the name makes it look like, allows existing subscribers to switch their loan from their existing lender to a new one.
How does this process takes place and what are the benefits?
Once you apply for balance transfer, your new lender will talk to your existing lender and get your loan foreclosed. The foreclosure amount so paid by your new lender becomes your principal debt and you’ll be repaying that including the applicable interest on that amount. Doing this will instantly reduce the payable interest component and hence, your overall liability.
Reference URL: Revise your Home Loan with Balance Transfer
Aman 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.