Home Loan Balance Transfer: When is it Fruitful?
Home loan balance transfer has become increasingly popular among home buyers from every class. Everyone, despite their financial status, wants to save every bit of penny that they can and that is what makes us common. However, before opting for something you don’t completely know about, it’s advisable to do some research and conduct some self-analysis to gauge the potential profits and loss. To be very honest, home loan balance transfer is very lucrative but under given conditions. Take a look at the conditions below.
1. The Interest rate difference
One of the primary reasons why people opt for home loan balance transfer is the savings on interest payable that it entitles the subscriber to. So, if you have the similar reason, make sure the interest rate differs by a considerable margin. Switching the lender for just a mere difference of 0.1 or 0.02% is not wise; the difference hardly justifies the home loan balance transfer fees.
2. The necessity
In India, if you have superior convincing abilities supported by rational arguments, you can always get yourself the best deals. Furthermore, before furthering on home loan balance transfer plan, it’s always better to do the last discussion with your existing lender. It’s not very difficult for them to offer you a better proposal knowing you have an option. So, talk to the existing lender and see if you can get yourself a better deal here. If you win, you will save a lot of time, efforts, and most importantly – money.
3. The cost of transfer
Applying for home loan balance transfer obligates you to pay additional fees as balance transfer cost. It’s mandatory and can’t be escaped. So, what you have to do is add the cost of the overall debt and then evaluate your decision. The aim is to find out if the switch is still beneficial after including the transfer cost.
4. The time of transfer
The time of transfer makes a big difference. The time of switch decides if the decision was worthy or not. Let’s suppose the repayment tenor is 10 years and you have completed 7, most of the interest is already recovered and the leftover is the principal debt. So, if you choose to transfer your home loan now, you are hardly making any profits. Home loan balance transfer helps you attain significant lucrative benefits if opted for during the initial years. So, if you have made up your mind already, make sure the time is in your favor.
5. Additional benefits from the transfer
Only the profit from interest difference is not enough, you need more solid convincing reasons to justify your actions. So, ask yourself, what more are you going to get from the switch? Some lenders offer top-up loan for balance transfer customers to make the facility more attractive and lucrative. This top-up loan allows home loan subscribers to borrow additional money from the lender without applying for a fresh credit, without going through the verification process. The same can be used to pay for the renovation and repair cost, and any other activity. If you are getting such facilities, home loan balance transfer is a good move.
Lastly, before you take any decision, don’t forget to do your own research. Get on google and look up for reviews on credible websites to see if your future lender is credible or not.