There are several situations that can be considered as the ideal time to switch a housing loan from one lender to another in India.
These different situations and the advantage of housing loan balance transfer. These are discussed below –
To Benefit From Better Interest Rates
Borrowers can transfer their housing loan to avail better rates of interest offered by a different financial institution. It is essential they compare different interest rates offered by lenders while also checking the
additional charges like transfer and technical fees. Calculating the total expenditure helps in making the right choice.
To Restructure Repayment
Transferring a home loan also allows a borrower to restructure their repayment tenor. They can choose to shorten or extend the tenor, both having its effect on the interest paid as well as the EMI amount. In case this tenor is reduced, the EMI amounts go up even though the interest paid is reduced. Increasing the tenor has the opposite effect on monthly installments and interest paid.
To Avail Top-Up Loans
Borrowers can transfer their loan to a different financial institution to avail the advantage of extending their line of credit. Known as a home loan top-up, few financial institutions allow borrowers to extend their credit account without the hassle of going through a new application.
Top-up loans don’t come with any usage restrictions. These are personal loans, which can be used for any purpose.
It is important for borrowers to note that while transferring their home loans, they should wait for a specific period till a substantial portion of their principal has been cleared. Usually, EMIs at the beginning of repayment clear a greater percentage of the interest and home loan transfer at this point might not be financially rewarding.
