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Home loan balance transfer is a highly beneficial facility that almost all lenders offer these days. Using this facility, home loan borrowers who are still repaying their loan can switch lenders and transfer the balance on their loan to another lender offering better loan terms and conditions. In 2012, the Reserve Bank of India came up with a new rule that forbade banks and commercial lenders from charging penalties on foreclosures and prepayments in the case of individual borrowers on floating interest rates. This new rule paved the way for home loan balance transfers.
Before we get to how a home loan balance transfer can help one reduce debt, let us look at how can a home loan transfer benefit individuals and when should a borrower opt for a home loan balance transfer.
Benefits of a Home Loan Balance Transfer
1. You Get to Avail of a Lower Home Loan Interest Rate
The majority of people opt for a home loan balance transfer when they find another lender willing to refinance their home loan at a lower rate of interest. Home loan interest rates determine the affordability of a home loan. A low home loan interest rate helps home loan borrowers reduce their EMIs and keep them affordable and easy to repay. Low home loan interest rates also help reduce the total cost of borrowing the loan.
2. You Get to Change Your Loan Tenor
Home loan borrowers who decide to switch lenders are also given the option of changing their home loan tenor while making the switch. If you can afford to increase your monthly payout towards loan repayment, you must shorten your loan tenor and try and become debt-free quickly. However, if the goal you wish to achieve through a home loan balance transfer is reducing your home loan EMIs and making them affordable, you can consider extending your loan tenor.
3. You Get to Switch to a Lender Offering Better Service
Not every home loan borrower switches lenders to benefit from a lower interest rate. Some borrowers also switch lenders as they are tired of their current lender’s mediocre service and want to switch to a lender known to have a more customer-centric approach. With a home loan balance transfer, borrowers get the option to choose a more reliable, trustworthy, and empathetic home loan partner.
4. You Get to Avail of a Top-Up Loan
When home loan borrowers opt for a home loan balance transfer, they are also given the option of availing of a top-up loan. This top-up loan money comes with zero end-use restrictions and borrowers can use the money to meet any kind of personal and professional needs. The tenor for these loans is the same as the borrower’s home loan tenor and therefore, repayment becomes less burdensome. Further, the interest rate that lenders charge on these loans is also quite low.
Let us now look at how can a home loan balance transfer help individuals become debt-free.
Here’s How a Home Loan Balance Transfer Can Help You Become Debt-Free
These days, almost every individual is servicing two or more loans. Some people have a car loan over and above their home loan and others have personal loans. The fact is that it has become nearly impossible to maintain a decent lifestyle without seeking external financial assistance in the form of loans. If you are someone paying off more than one loan, a home loan balance transfer can help you become debt-free sooner.
When borrowers apply for a home loan balance transfer, they are given the option of availing of a top-up loan. Since this top-up loan comes with zero end-use restrictions and the borrower can use the money to take care of all kinds of expenses, they can also use this top-up loan to pay off their other loans. This is a smart move as the interest rate on top-up loans is much lower than the interest rate on other loans, such as a car loan or a personal loan. Thus, availing of a top-up loan on your home loan is an ideal way to consolidate your debt and become debt-free quickly.
Choose Bajaj Housing Finance as Your New Lending Partner
If you are looking to switch lenders, consider going with Bajaj Housing Finance. The NBFC is a wholly-owned subsidiary of Bajaj Finance Ltd., one of the most popular and diversified NBFCs in India. Further, Bajaj Housing Finance has recently slashed its home loan interest rates. Applicants with the right profile can get their home loan refinanced with interest rates as low as 8.45% per annum and home loan EMIs as low as Rs.729/Lakh. Further, Bajaj Housing Finance has also extended its maximum loan tenor and is now giving home loan borrowers the option to repay their loan over a period extending up to 40 years. Further, the company has simple and easy-to-meet home loan eligibility and document requirements, which makes getting approved for a home loan with them quite easy.