The EMI home loan sector in India is expected to grow by about 18% in the fiscal year 2019-20. The main reason behind this growth is a massive rise in the property rates in India, along with the easy availability of such credits from various financial institutions.
However, a home loan is a long term commitment and can lead to a financial crisis for borrowers. They must conduct proper research before availing such advances.
Housing loan balance transfer facility was introduced to reduce the financial burden on borrowers. It is the process of shifting the current loan account of an individual to another lender who offers a lower rate of interest and hence reduces the total cost of credit.
Reduce Your EMIs by Availing Housing Loan Balance Transfer
Borrowers can benefit from transferring their home loans to a new lender irrespective of fixed or floating interest rates. RBI changes the Repo rate depending on the current economic condition in the financial market, which subsequently adjusts the floating interest rates on a home loan. Borrowers can make the most of this opportunity to transfer their outstanding credit to a lender offering a better rate.
Also, some financial institutions provide offers for a fixed period on interest rates. Borrowers should keep themselves updated about such financial offers and terms so that they can transfer their loan at the right time to reduce their EMI burden.
Along with reducing the financial burden, housing loan balance transfer comes with the following benefits.
Less Associated Costs
Part pre-payment and foreclosure are two facilities that a borrower can avail to reduce the total cost of a loan. However, lenders may charge a high penalty fee for such facilities. Borrowers should consider the part-prepayment and foreclosure charges before choosing a home loan balance transfer.
Better Repayment Terms
Financial institutions have their repayment terms. Borrowers can avail home loan transfer to reduce the financial burden on them and repay the debt as per their financial capabilities. They can use an online home loan transfer calculator to determine the savings they can generate.
There are few NBFCs that offer a Flexi loan facility against such credits. Under this facility, borrowers have the convenience to pay interest only on the withdrawn amount and repay interest-only EMIs. These repayments are at the convenience of borrowers and ensure that there is no unnecessary stress on their budget owing to the convenient payment structure.
Additional Credit Amount
Financial institutions offer top-up the loan when a borrower avails a balance transfer facility. It is a beneficial facility that a borrower can opt for. It comes with no end-usage restrictions and can be used to fund any of the required expenses.
Furthermore, borrowers can benefit from a top-up loan as they do not need to go through the application process again or furnish extra documentation as the credit is offered based on existing credit.
Home Loan Takeover Process
Borrowers have to follow the following steps to avail a home loan balance transfer-
- They need to shop around for the lowest interest rates and favourable terms.
- Borrowers need to negotiate with the existing lender for better deals on their financial agreements.
- They need to collect the No Objection Certificate (NOC) and other essential documents from a lender.
- They need to submit the required documents to the new lender.
Borrowers should avail a balance transfer facility at the start of their home loan tenure to ensure that they enjoy the benefits for a prolonged time. Also, they can use an online eligibility calculator to check the amount they are entitled to avail.