While most of us dream of having our own house, not many of us can afford the finance entirely. This is why the concept of home loans has prevailed in today’s day and age. With people settling down at an early age and being a part of the by-and large corporate set up, having a home of your own does not only provide security but also aids in giving one the financial stability that is required. But owing to market fluctuations, there are a lot of players in the market that offer you great interest rates suited to your needs. Let’s understand the concept of home loan balance transfer, a facility that can prove beneficial to you while planning out your home loan finances.
UNDERSTAND THE PROCESS
If you are wondering what the difference between balance transfer and re-financing is, then let us tell you that there is none. It is basically a transfer done to take the advantage of lower rates in the market. Individuals, who have opted for fixed deposit rates can benefit from this change, if the interest rate is lowered by another entity.
GET RID OF THE BANK THAT DOES NOT ACCOMMODATE
The biggest advantage of a home loan balance transfer is the option of choosing a bank that can accommodate your needs. With multiple players in the market, giving similar service, if your bank does not change the rate (in case of a floating rate) or refuses to extend your tenure, keeping your budget in mind, then re-financing is a great way to get rid of this problem.
THE PROCEDURE IS TEDIOUS AND REPETITIVE
One of the main issues with a home loan balance transfer is the repetitive nature of the process. You have to go through the whole paperwork again and the procedure can be quite tedious. Some banks also are not very accepting and swift in processing the refinancing, as they lose business to a competitor. But, once you are past that problem and you manage to find an efficient bank, then the transfer becomes much easier.
REASONS TO OPT FOR A TRANSFER
There are multiple reasons for an individual to opt for a transfer. The foremost being a service issue. If it is not satisfactory, then changing your bank is always a better idea. Another main reason is the top-up factor. If the cost requirement for the property vary and go higher, then you will need to accommodate that price in the current home loan tenure as well. Some banks do not accept this change and it becomes difficult for an individual to continue. Banks also do not generally let one change the preference to a longer tenure since that results in lower interest rates. It is advisable to opt for a transfer in all of the aforementioned scenarios.
POINTS TO KEEP IN MIND
Some pointers to keep in mind while going for refinancing are:
- Be regular with your payments, so that the new lender does not face any issues validating your requirements.
- Banks do charge a penalty of prepayment for balance transfer. Always take these charges into account before opting for a transfer.