The loan amount is surely a time-bound liability. Running a loan at a higher interest is always a matter of concern. However, there is a process of moving your outstanding home loan easily. This can be done to avail a lower interest rate. To get some relief from the obligation you may choose to get your outstanding loan transferred to another bank or lending institution. Wondering how? The process is technically termed as home loan balance transfer. This interesting feature enables the borrower to switch lenders and avail of some amazing benefits of this transfer.
Home Loan Balance Transfer: How Does It Work?
This option is provided to home loan borrowers, allowing them to transfer the remaining loan balance amount to another lender. The most common reason for doing so is that the borrower can avail lower interest rates on the loan elsewhere.
Most important, the borrower isn’t obligated to repay the loan throughout its entire tenure only to the concerned lender. He can anytime choose another lender if the latter offers a lower ROI. This is how the process works:
- If a borrower wishes to switch lenders, the new lender approves the loan takeover.
- Post takeover, the new lender pays off the balance amount to the current lender.
- The current lender then releases the property documents; issues no-dues certificate to the borrower.
- Subsequently, the borrower hands over these documents to the new lender.
- The borrower then begins paying all the balance EMIs in the future to the new lender on the new ROI.
- Consequently, the borrower also needs to close the old home loan account with the previous lender. He then opens a new account with the current lender.
This arrangement offers several benefits to the borrowers which are explained below.
Home Loan Balance Transfer: Benefits of Availing
1. Lower ROI:
This is the most common attraction for borrowers. A different financier may offer lower rates of interest on the same principal loan amount. Besides that, lower ROI also means lower EMI. This results in higher savings per month for the borrower.
2. Lower loan tenure:
Transferring the outstanding loan amount to a different lender may also reduce the home loan Different banks provide different norms in case of home loan transfer. Lower loan tenure is one of them. Availing this option may actually work in favour of the borrower by hastening loan repayment.
3. Top-up loan facility:
Several financial institutions provide top-up loans to people willing to opt for home loan balance transfer. Top-up loans are a great way to pay off immediate debts. Besides that, the borrower can also use them for home improvement.
Generally, your current lender may not offer this facility despite the appreciation in the market value of your property. However, the new financier can help you in this regard.
4. Lower EMIs:
Again, different banks follow different norms for providing home loans. The EMI amount defined by each bank would generally vary. By transferring your home loan balance amount, you can avail of lower EMI options elsewhere. Most important, it’d help considerably reduce your monthly financial burden.
Availing home loan transfer is quite easy and most banks provide this. Opt for it and enjoy its numerous benefits.
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