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Benefits Of Home Loan Balance Transfer

By IIFL Home Loans | Published On May 23 2018 12:45 PM 2 min read 93 views 3475 Likes
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Benefits Of Home Loan Balance Transfer

Home loan balance transfer is a viable option for investors to switch from one lender to another that offers lower interest rates. The new lender approves the takeover of your home loan and pays the outstanding amount to the current lender. Post receiving the pending amount, the existing lender releases the property documents and also issues a no due certificate to the borrower. These documents are handed over to the new financier. Once this process is complete, you have to pay all the remaining future Equated Monthly InstallmentsEMIs to the new lender as per their interest rate norms. In this option, you close the old home loan account and open a new account with a different lender with better benefits like lower Rate of Interest ROI, lower tenure etc.

Features of a home loan balance transfer:

  1. Balance Takeover BT of your home loan is equal to the process of obtaining a new loan.
  2. Your home loan is eligible for a takeover only after a certain period.
  3. When another bank takes over your home loan, they transfer your outstanding principal amount to the existing lender.
  4. This process usually involves nil takeover charges with your existing lender when loan is obtained in individual capacity, although not fixed and may vary with different Financial Institutions.
  5. Before considering home loan transfer, you should maintain a good track record of repayment with the current lender.
  6. Some Financial Institutions also require a good credit score and history before approving such transfer.

Futher, this balance transfer also provides a host of benefits:

  • Lower interest rates:

The most common reason for opting a home loan transfer is reduced interest rates. Reduction in ROI leads to lower EMI and hence more monthly savings. It may also reduce the overall tenure of your home loan.

  • Good repayment track record may get you good Rate of Interest ROI:

When opting for transfer, you can negotiate the terms and conditions of your home loan by citing your track record of payments, your credit score, and other points. This may help you in obtaining a lesser rate of interest, or better benefits than your current lender.

  • You can get a top-up loan:

Many financial Institutions offer a top-up loan when you are transferring your home loan to them. You can avail these loans at competitive rates and use them to pay off your immediate debts or use it for home renovation. Your current lender might not offer this top-up loan even when there is an increase in the real estate price/ market value for your home. However, the new lender will definitely consider the current market value of your property as the benchmark and may also offer a top-up loan.

Other than these reasons, you may also get better customer service, shorter duration of loan tenure, EMI and/or other many other benefits that are not offered by the current lender.This balance transfer can also boost your credit score rating.

Nowadays, transferring a home loan is quite an easy process as banks have embraced modern technology. All information about the borrower, including their credit score, is available online. This reduces the hassle of documentation and you can avail home loan balance transfer easily. Managing monthly expenses alongwith a running Home Loan EMIs may cause financial stress especially when you pay a higher interest rate. To avoid such hassles, opt for home loan balance transfer to enjoy lower rates and shorter duration of EMIs or tenure.

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Written by Sheetal Chhabra, Policy Manager- IIFL Home Finance Limited

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Disclaimer: The information contained in this post is for general information purposes only. IIFL Home Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment, etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness, or of the results, etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability, and fitness for a particular purpose. Given the changing nature of laws, rules, and regulations, there may be delays, omissions, or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Home/ Loan Against Property/ Secured Business Loan/ Balance Transfer/ Home Improvement Loan/ NRI Home Loan/ Home Loan for Uniformed Services) loan product specifications and information that may be stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Home/ Loan Against Property/ Secured Business Loan/ Balance Transfer/ Home Improvement Loan/ NRI Home Loan/ Home Loan for Uniformed Services) loan.