A lot of borrowers struggle with their home loans, and one common reason for this is the high interest rates that they are stuck with. In such cases, one solution is to refinance their loan to a new lender that offers better terms. This move is called a home loan balance transfer. With this transfer, the outstanding loan amount is cleared with the existing lender and transferred to the new lender. The borrower then starts paying monthly instalments for the loan to the new lender based on the revised repayment terms. Now, if you are wondering how a home loan balance transfer can ensure big savings, read to learn more.
1. Borrowers can get lower interest rates by refinancing their home loans
One of the main benefits of opting for a home loan balance transfer is to get a lower home loan interest rate. Most borrowers focus on the home loan balance transfer interest rate as this could be vital in bringing down the monthly instalments of their home loans. Not just this, it could also bring down the overall cost of the home loan.
2. The new lender can offer a more flexible repayment tenure
There are situations where borrowers are not happy with the repayment tenures of their home loans. They find it difficult to pay off the loan’s EMIs and might default on a few payments, which would negatively affect their credit scores. This is where a home loan balance transfer can help, as the new lender can offer a more flexible repayment tenure. With this, the borrower’s EMI payments would become affordable.
3. Borrowers can also apply for top-up loans while transferring their home loans
A lot of borrowers think that a home loan balance transfer is only for easing their repayment. However, this is not true. There are cases where borrowers struggle with repaying their home loans while also being in need of financial assistance. In such cases, it is also possible for these borrowers to apply for a top-up loan while transferring their home loans. This way, they successfully make sure they get an easier repayment plan as well as arrange for additional funds. This proves to be a great help in improving their finances.
Lastly, apart from the aspect of saving money on the overall cost of the loan, a home loan balance transfer can also help a borrower get access to better services from a lender. It is possible for borrowers to not be completely satisfied with the services of their current lender. This could involve anything from the pre-payment terms to customer service. In this case, a borrower can always transfer their home loan to a lender that offers better service.
Also, before transferring a home loan, make sure to use a home loan EMI calculator. This calculator will help in understanding the new EMIs based on the revised terms. This way, a borrower can understand whether the new EMIs would be more suitable for their budget.