Home Loan Transfer: Know the Benefits to Avail Before Shifting to Another Lender

In today’s lending industry, home loan transfer has become a viable option for existing borrowers to enjoy reduced interest rates. With the RBI declaring repo rate cuts, new borrowers are expecting property loans to become more reasonable. Both the RBI and the finance minister emphasised on the better transmission of these policy cuts to borrowers, with the advantage of lower interest.

As such, existing borrowers are looking to transfer their home loan balance for reduced interest rates. 

The new lender pays off the current lender in full. Once the process completes, borrowers start paying the EMIs for the remaining outstanding to the new lender, following their interest policy. 

However, certain home loan takeover charges, time and efforts involved often surpass the benefits. Borrowers should, therefore, assess the features offered before going through steps to avail a home loan balance transfer

Benefits of Home Loan Balance Transfer  

  • Lower interest rate 

When opting for a balance transfer, borrowers must ensure that the new lender offers a comparatively lower rate of interest on the home loan. It reduces the EMIs and often the tenor as well, leading to more monthly savings. 

Banks offer home loans based on the MCLR, while housing finance companies and NBFCs provide depending on their competition and market standards. Customers must compare the offers to avail the best deal and know the MCLR rate before applying. 

Besides interest rates, charges such as processing fee, foreclosure charges, statement fees, etc. are also levied. All these rates combined must justify the home loan transfer to another lender. 

  • Better terms and conditions 

Balance transfer signifies better terms and conditions of the new lending organisation. Borrowers who have maintained a good track record of repayment, a healthy credit score and such other factors can also negotiate the policy. This enables them to enjoy additional features and benefits on the home loan. 

  • Home loan top-up  

Leading financial institutions often provide a top-up loan along with balance transfer facility. It is an exclusive financing option to address additional expenses which are not covered by the home loan. 

Customers who need extra funding for say purchase of home fixture, repairing, make structural changes, etc. can avail the top-up on and over their existing property loan. Some of its benefits include the following:

  • It comes with no end-usage restriction. Borrowers can also utilise the funds for marriage expenses, child’s education, foreign trip, etc.   
  • It requires no additional documentation. 
  • Borrowers are eligible for tax benefits on this top-up loan. 
  • The interest rates charged on this additional credit are nominal. 

Eligible borrowers can use a home loan transfer calculator which instantly shows the balance transfer savings, eligible top-up, etc. The calculation bases on information, including existing home loan, tenor, total fund sanctioned, and interest rate. 

Approach a reliable lending institution offering comparatively lower housing loan rates. Individuals can enjoy additional benefits on home loan like – 

  1. Zero foreclosure charges 
  2. 100%  transparency with no hidden charges
  3. Tailored insurance plans 
  4. Prepayment facility with zero additional fees
  5. Online account management 
  6. Minimal documentation
  7. Reasonable rates and charges 

Individuals can use an online eligibility calculator to check if they qualify and increase their chances of approval. Managing significant home loan EMIs can cause unnecessary financial burden throughout its longer tenor. 

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