With real estate prices being so high in today’s times, it becomes difficult for someone to purchase a house without any financial help. This is the reason why so many homebuyers take the help of home loans to get the financial assistance that they require. Now, when you apply for a home loan, it is natural to look out for a plan that offers a low interest rate, suitable repayment tenure, and a sufficient loan amount. However, lenders keep offering new loan plans with updated terms. Does this mean that once you have already taken a home loan, a better plan cannot be opted for? Absolutely not!
If you have found a home loan plan with better terms, it is always possible to go for a home loan balance transfer. This transfer involves refinancing your current loan plan to another lender offering better terms, such as a lower home loan balance transfer interest rate, and/or a top-up loan. Now, before refinancing the existing home loan, you need to be aware of certain things when it comes to a home loan balance transfer.
So, take a look at the following points before going ahead with the loan transfer:
- Keep a good credit score
Any lender is going to evaluate an applicant’s credit score before approving their application. It is possible that you might not have got a better deal on your home loan because of your credit score. However, if you improve your CIBIL record and then go for a home loan balance transfer, the new lender is more likely to offer better terms.
- Focus on the interest rate being offered
Most balance transfers take place because of the difference in the interest rate. This is because even a slight change in the interest rate of the loan can affect the monthly instalments of the loan significantly. This is why it is very important to make sure that the new lender is offering a good home loan balance transfer interest rate.
- Take a look at all the charges involved in transferring the loan
Just because the new loan plan is offering better terms does not mean that it is always going to be profitable. It is equally important to check about charges involved in transferring your home loan to the new lender, such as the processing fee or administration fee. Consider these charges while calculating the savings made by the transfer.
- Use a home loan balance transfer EMI calculator beforehand
To understand whether the loan plan is going to be suitable, it is important to make use of a home loan balance transfer calculator. When the calculator will display the new EMIs, you can decide whether they are suitable for your budget or not.
After going through these points, you can take a decision on transferring your home loan. Make sure to check with the lender about the documents required for home loan balance transfer, as this will ease the entire process of refinancing the loan.