Explained; benefits of Home Loan Balance Transfer with Top up loan facility/offer

Currently, the home loan interest rates have fallen to the lowest in decades. But, if you are the one who is still paying your home loan EMIs on the previous rate, then it’s time for you to go for a home loan balance transfer. 

Reduces the Interest Rate and hence the EMI

One of the major reasons for choosing a home loan balance transfer is the reduced interest rate. When you are paying a higher rate of interest for your loan and other lenders are offering the loan at lower rates, going for a balance transfer works in your favour and allows you to switch your loan to a lower rate with a new lender. This further reduces your monthly EMI and thus saves a lot of money for you. 

Helps you get better terms on your loan

Different lenders offer different terms for their loan offerings. And in case you have availed of a home loan whose terms are not in your favour then transferring your loan to a lender who is offering the same loan at your favourable terms can help you out. 

Foreclosure and prepayment charges

The Reserve Bank of India in its mandate dated 2012, lifted foreclosure charges from home loans that are on the floating interest rate. 

However, for the home loans at a fixed rate of interest, banks are free to charge a par-closure fee varying from 2% - 4% of the outstanding amount.  

So, borrowers who are on a floating rate of interest and want to prepay or foreclosure their home loan should definitely go for it. 

Top-up loan amount

Home loan balance transfer also comes with an additional benefit which is – the top-up loan facility. Once you go for a balance transfer you can also get some additional amount over and above your outstanding amount. 

But, before you go for a balance transfer, here are few things which you need to ensure.

• Ensure that the remaining repayment period exceeds five years
• Ensure you have not defaulted on EMI payments with the existing loan.
• Ensure that you have all the property-specific documents ready.

A Home Loan Balance Transfer is a great facility that helps you to reduce your EMI/debt burden. Home loan balance transfer also helps you to – reduce the interest rate, get a top-up loan, get favourable terms on your loan, and also customized offers in some cases.