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5 Ways to Maximize Your Home Loan Balance Transfer Benefits

By IIFL Home Loans | Published On Jul 06 2023 7:58 AM 1 min read 81 views 3707 Likes
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A home loan balance transfer may just be the right move for you if you have been struggling to pay off your EMIs. Did you know even a slight decrease in the interest rate for your home loan balance transfer can lower your outstanding amount by several lakhs? Financial institutions like IIFL Home Loans offer balance transfer facilities at lower loan interest rates and flexible loan tenure options. However, a balance transfer is not as straightforward. There are several things to consider before you can successfully transfer the remaining balance of your home loan to another lender. You must do your due diligence considering that the benefits are quite substantial.

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Avail flexible payment terms with home loan balance transfer

Key Factors to Consider Before Opting for Home Loan Balance Transfer

Compare the new and the old EMI to estimate savings

1. Check the eligibility criteria of your preferred lender

You have to meet the eligibility checklist of the lender of your choice to apply for a home loan balance transfer and enjoy lower interest rates. Some common eligibility conditions are:

Apart from these conditions, your credit score, income, outstanding amount, repayment tenure, etc. also play a part in the interest rate that you are finally offered.

2. the EMI using the home loan balance transfer calculator

Visit the website of your chosen financial institution and locate their home loan balance transfer calculator. All you have to do is input the principal amount, the outstanding amount, tenure, and interest rate, and it will give you an estimate of the EMI amount. This should give you an idea of how much you are likely to save if you opt for a balance transfer. 

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If you find that the difference is not significant, you could negotiate with your current lender to adjust the interest rates as per market conditions. This is called resetting the home loan balance. It will save you the payment of home loan balance transfer charges.

For your information, with IIFL Home Loans' balance transfer service, you get to enjoy reduced EMIs depending on how good your credit profile is! Learn more about the features of the balance transfer service offered by the lending institution here.

3. Pick your bets after monitoring fluctuations in the interest rate

Before any home loan is sanctioned, you get to pick between two interest options:

Now the good news is that you can switch between these options. If you had opted for a floating-rate home loan, and see that the interest rates are only going up without showing any signs of a decrease, you can transfer your home loan balance to a fixed rate.

4. Enquire about the terms and conditions, and the additional charges

Home loan balance transfer charges may include application fees, processing fees, legal charges, stamp duty, etc. Lenders can levy an additional foreclosure charge in case of fixed-rate home loans. Make sure that you read all the details and calculate your savings to see if the balance transfer is worth the switchover.

5. Ask yourself if this is the right time for a balance transfer

Consider initiating your home loan balance transfer process only if you are in the early stages of repayment. Not only will you enjoy lower interest rates, but also get an extended tenure, which can reduce the monthly burden of your EMIs. With IIFL Home Loans, you get the flexibility to choose your own tenures (up to a maximum of 20 years).

On the other hand, if you are near the end of the loan tenure, you would have already paid off a major chunk of the interest component. So, in this case, you stand to lose out on the real benefit of a balance transfer. 

    • You should have paid 12 months’ worth of EMIs without default before you can apply for a balance transfer.

    • Your property registration needs to have been completed before you apply for a balance transfer. Without a copy of the registered deed, lenders won’t sanction a transfer. 

    • In some cases, there might even be a limit to the maximum amount that you can get as a balance transfer. But you don’t have to worry about this with IIFL Home Loans, because the leading NBFC has set no such limits for balance transfers. 

    • Fixed interest rate - The interest rate remains constant throughout the loan repayment tenure.

    • Floating interest rate - The interest rate fluctuates with market conditions.

Bottom line

The benefits of a home loan balance transfer are manifold but you need to understand the intricacies of the whole process, the terms and conditions, and its desirability in your case. In addition to keeping track of interest rates, start making more effort towards improving your credit profile. Weigh in all these factors to make an informed decision and get the best deal from the bank/financial institution.

FAQs

1. What is a balance transfer?

A balance transfer is the process of transferring your outstanding loan obligations from your current lender to an institution offering lower interest rates, longer durations and better terms and conditions.

2. What is the home loan balance transfer process?

Here's the step-by-step home loan balance transfer process:

  • Pick a lender.

  • Fill in the application form.

  • Get assistance regarding the product and the process.

  • Once the application is complete, pay the processing fee.

  • Upload relevant documents.

3. What should one do before a home loan balance transfer?

  • Negotiate a lower interest rate and longer repayment term with your existing lender based on your credit profile.

  • Check that you meet all the eligibility criteria.

  • Make note of all the home loan balance transfer charges to avoid paying any hidden costs.

4. What are the benefits of home loan balance transfer?

The key benefits are:

  • Lower interest rates

  • Lower EMIs

  • Longer repayment tenure

  • Top-up loan facility

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