Home Loan Balance Transfer - The Perfect Exit That Youre Looking For

  • Added:
    Feb 27, 2014
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Home Loan Balance Transfer - The Perfect Exit That Youre Looking For Photo by Aishwarya Mahurkar

Many people look at home loan balance transfers as the perfect exit strategy to get away from the current home loan problems. Put simply, this facility allows users to transfer their existing loan amount from one lender to another. This could be a good option, given that over a period of 20 to 30 years, there may be several financial issues arising if you find yourself with a financial partner that is not suited to your needs. It is important, though, to enter a new contract carefully so that you can complete the repayments easily for the tenure chosen.

Why do you need this exit? There are quite a few reasons. Users sometimes opt for a home loan balance transfer  to benefit from decreased interest rates in the market that their current financial partner might not be extending to them. If you can save substantially even after deducting the processing charges, it is a great choice for borrowers. It can also be possible that the current financial partner no longer fits your bill of needs.

You can also consider this if your current lender refuses to top-up your loan. A top-up is often looked at when the value of a property has increased substantially when compared to its original value. In these cases, users often want additional financial aid to meet requirements like home renovation. You may also find yourself not being in a financial position to pay the current EMIs. In such cases, if the current housing finance company does not allow you to adjust your EMIs for a longer term, you can opt for a transfer. While home loan transfers allow you to do this easily, it shouldn’t be considered as a final option, though. This is because lower EMI rates for a longer period of time could mean more interest payment and additional cost for you.

Since a home loan transfer will need you to spend again on processing as well as special processing fees, it is advisable to ascertain the profitability of any transfer before taking it up. An important requirement for this is a clean repayment track record when approaching a new financial institution. Whatever the reasons for wanting a transfer, it is wise to first ensure that you are in a good financial position to avail all the benefits of a home loan transfer .

An important point that tends to get overlooked is the terms and conditions attached to the home loan balance transfer. For the most part, users will have to make EMI payments for the next 10 to 15 years. Over this loan term period, many salaried personnel, professionals or businessmen may find themselves earning enough income to complete their loan payment earlier and save on some of the interest. It is important to read the fine print to make sure that your financial partner offers you this service. If the current bank doesn’t allow you to do so, you can consider applying for a transfer.

There are some potential pitfalls that you need to keep in mind, though. A lowered home loan rate that you are being offered by a certain financial partner may rise over a period of time. This possibility must be taken into account before signing a transfer contract.  Before transferring your loan, it is necessary to get a no objection certificate (NOC) from your current lender. It is also advisable to transfer your home loan within the first 2 or 3 years of the loan tenure. That is because, by this time, you will have paid off most of the interest amount, and while transferring, will have to pay again in charges and start over again.

Author's Profile

Aishwarya Mahurkar is an experienced writer concerning the finance industry. Her articles help in informing her readers of the opt for a home loan balance transfer and the benefits of a home loan transfersector.

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