According to a recent report, it is claimed that home loan balance transfer by borrowers has increased by 20% of all the mortgages sanctioned. One of the major reasons being that this is a cost effective move which gives some breathing space to borrowers.
So, the question arises when is it a good time to opt for balance transfer facility? Usually, as home loan is a long-term commitment for borrowers the transfer helps especially if the loan has been taken at a higher rate of interest. So, in case where there is still ample time left to pay the loan borrowers can apply for transfer and in the process save substantially.
If you ask me is it a good move? My answer would be Yes. especially today when the REPO rate has been hiked and home loans have become costlier.
If you are thinking of switching your home loan lender, read on -
MCLR Linked Home Loan: the transfer is a good option for home loan on high interest rate with MCLR plus spread. For borrowers who have taken the loan say in May 2016, when the MCLR lending kicked in, the banks reset the interest rate after 12 months. So, as per the reset dates borrowers can opt for balance transfer on their home loan.
Base Rate Home Loan: borrowers with home loan on base rate can either switch to MCLR loan or get the loan refinanced. Where, such borrowers can switch to the same lender’s MCLR anytime by paying a certain fee and signing a single page document. Even if they switch to a new lender it can be done without any waiting period. Actually, the differential between base rate and MCLR is quite wide, so it simply makes sense to switch to MCLR of the same lender or another lender who offers lower rates of interest.
Read Also: 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.