Example - You took a home loan of 50 lakh rupees from ABC bank at a rate of 10% interest per annum in 2014. Now, 5 years later you can see that the interest rates for home loans are 8-9%. In order to save on interest costs, you can approach another bank or financial institution for a home loan balance transfer.
Why should you get a home loan balance transfer?Aside from the benefit of lower interest rates, you can also get a home loan balance transfer to restructure your loan. You can opt for a higher or lower loan duration so that you can change the amount of EMI you have to pay every month.
The best time to get a home loan balance transfer is in the first 5 years of the loan, as that is the period during which you pay the most interest. Having a reduced interest rate is most beneficial in the early stages of your loan. A reduction of even 0.5% can result in great savings in the long run, especially if you get it in the first 5 years.
What are the costs of a home loan balance transfer?Each lender has a different policy when it comes to home loan balance transfers. The costs of transferring your loan can include the following.
- Processing fees
- Documentation charges
- Stamp duty charges
- Property valuation fees
- Pre-payment charges to close your existing loan
Selecting a new lenderThe first choice for a new lender is usually one who charges lower rates of interest. However, it is important to make sure you are choosing a reliable lender who is able to provide the services you need. Certain lenders may not provide
Issue NoticeCheck your loan agreement to see if your lender requires you to provide due notice before pre-closing your loan. Even without a legal requirement, it is still a good idea to inform your lender in advance.
Time it correctlyThis is especially important if you have taken a construction loan. Inform your builder beforehand and ensure that no additional funds are required for a period of 10-25 days from the date of transfer.
Check our attractive home loan balance transfer options.
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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