A home loan takeover, commonly known as a home loan balance transfer, is the process of transferring your current loan balance to another financial institution. Borrowers going for a balance transfer usually do so to avail a lower rate of interest from another financial institution. Here are a few essential things every borrower should know before applying for a home loan transfer.
- Lower rate of interest
A home loan takeover is usually preferred by borrowers because of the availability of a lower rate of interest. Since various lenders provide different interest rates, it is advisable to carefully research the financial market before settling in on a particular offer.
- Flexible tenors
The total interest payable can become quite significant if the repayment tenor is too long. However, during a home loan transfer individuals can opt for a shorter tenor enabling them to reduce the total payable interest.
However, this may increase EMIs. Hence, borrowers are advised to use an online EMI calculator to calculate the installments before the takeover.
- Availability of top-up loans
Individuals applying for balance transfer are usually eligible for top-up loans as well. It enables borrowers to avail of such a loan over their existing home loan.
Some of the advantages of availing a top-up loan include nominal internet rates, easy approval process, zero documentation, etc. It also comes with an extended tenor compared to a personal loan.
Applying for a home loan takeover is one of the key ways you can save on your interest payments. Nonetheless, it is advised that you do so during the first few years of the repayment tenor.
