The home loan balance transfer allows loan borrowers to transfer the entire remaining principal loan amount to another bank or lender keen on refinancing the loan at a lower rate of interest. However, the rationale behind a home loan balance transfer does not stop at low home loan interest rates. Individuals also transfer their home loans to benefit from better customer service or when in dire need of a top-up loan. 

Home loan balance transfer, though a highly beneficial facility, does not always prove lucrative. The remaining principal loan amount, the difference between the old and new home loan interest rates, and the remaining home loan tenor are the three factors that determine whether the home loan balance transfer would indeed prove fruitful or not. 

Banks and commercial lenders offer the balance transfer facility on almost all loans, including personal loans and loans against property. However, since home loans are big-ticket expenses and involve substantial loan amounts, even a small difference in the home loan rate of interest can help borrowers significantly reduce the cost of borrowing funds, especially if the remaining loan tenure is long. Lenders establish qualifying criteria for people aspiring to opt for a home loan balance transfer. However, if you have been prompt with all your home loan EMI payments, the home loan balance transfer process is going to be fairly straightforward.  

Home loan balance transfers attract different charges. These charges will become known to you during the home loan transfer procedure. The home loan transfer processing fee can easily range from 0.25% to 1% of the total remaining principal amount. However, other than the home loan transfer charges or processing fees, fixed-interest-rate home loans also attract a pre-payment penalty. In some cases, administrative fees and legal charges are also levied on home loan balance transfers. Therefore, borrowers must opt for the home loan balance transfer after doing an elaborate cost-benefit analysis. 

So, how does a home loan balance transfer help you save on your mortgage? When a home loan borrower switches from a higher home loan interest rate to a lower one, either their home loan EMIs come down or their home loan tenor is shortened. In both cases, the result is reduced interest payout on the loan and therefore, reduced cost of borrowing money. Individuals finding it hard to pay their home loan EMIs can opt for a home loan balance transfer and ask for their home loan EMIs to be reduced in response. Borrowers who can comfortably afford their home loan EMIs, on the other hand, can ask for their home loan tenor to be shortened so that they become debt-free sooner. In conclusion, a home loan balance transfer can help your mortgage affordable. It can also help you reduce the total interest payout on your home loan.

Here are some other ways in which a home loan balance transfer can prove beneficial: 

1. Top-Up Loan: When you apply for a home loan balance transfer, you are extended the option of availing of a top-up loan. Under a home loan balance transfer, one can avail of a home loan top-up as high as Rs.1 Crore. The top-up loan funds come with no end-use restrictions, attract a low rate of interest, and have a long repayment tenor. These factors make a top-up loan an ideal option for those looking to raise funds quickly and at the best possible loan terms and conditions. 
2. Better Service: Over the last few years, the market has seen the entry of many lenders within the home loan space. The competition is tough and lenders try and lure customers with promises that are hard to keep in the long run. Home loan borrowers feeling frustrated with their lender’s sub-standard service are many. These borrowers can find solutions to their problems in a home loan balance transfer. 
3. Lastly, when you choose to go for a home loan balance transfer, you get the option to change the terms and conditions of your loan. You can opt for a shorter home loan tenor if you want to become debt-free quickly and a longer tenor becoming debt-free is your priority. You can also change your interest rate type when you opt for a home loan balance transfer and change lenders. 

Final Words

The home loan balance transfer process is fairly straightforward. If you meet the qualifying criteria, you can apply for a balance transfer. However, a balance transfer must always be opted for after a thorough cost-benefit analysis.