Home Loan Balance Transfer: If you think your bank is charging more interest compared to other banks, you don’t have to keep your loan with that bank. You can transfer your home loan to another bank if needed.
Nowadays, most people purchase homes through home loans. However, as the interest rates on home loans rise over time, the burden of your EMI also increases. This often traps the borrower in a cycle of escalating EMIs.
If you find that your bank is charging higher interest rates compared to other banks, you don’t have to stick with that bank for your loan. You can transfer your home loan to another bank. This process is known as Home Loan Balance Transfer or Home Loan Refinancing.
What are its benefits
Home loan refinancing involves taking out a new loan with lower interest rates and closing the old loan. This can help you reduce the burden of your EMIs. With the new loan at a lower interest rate, your EMI decreases.
Additionally, you get the opportunity to restructure the loan. When taking the new loan, you can adjust the EMI tenure to suit your preferences.
When should loan refinancing be done
Choosing to refinance your loan before the halfway mark can be advantageous. At this stage, a larger portion of your EMI consists of interest. Thus, securing a new loan with a lower interest rate can be very beneficial.
The benefit of loan refinancing is realized only when you are unable to manage the high current interest rates and the new loan offers you a lower interest rate.
If you have taken a loan at a fixed interest rate, but interest rates start to decrease after some time, and you wish to adopt the new rates, but your bank is unwilling to offer you the option of a floating rate loan, you can opt for loan refinancing.
Should your financial situation be better than before and you want to reduce the loan term, refinancing allows you to pay off the new loan in less time.
If the EMI burden on you is too much and you want to reduce the EMI by restructuring.
If you need more funds for home designing or other expenses after taking out a loan, you can, after a few years, start a new loan with a bank that offers a lower interest rate and opt for a higher loan amount.
If you believe that your lender is not providing good services and you are dissatisfied with their facilities, you have the option to refinance your loan.
Fees at the time of balance transfer
For a balance transfer, you will need to pay foreclosure fees and loan transfer charges to your existing bank. Additionally, the new bank to which you are transferring your loan may require you to pay stamp duty, loan processing fees, and other charges typically associated with applying for a new personal loan.
