Home Loan Balance Transfer- Is It Worth it

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There are many other benefits of a balance transfer. Let’s look at them. LOW EMI- A balance transfer is done to minimize the burden of a high EMI amount. One may start the loan with an EMI amount which becomes heavy in later days because of increased liabilities. In those situations, a balance transfer can save minimum 5% of the EMI. Saving 5% every month for coming 10 or more years will be a great saving which can be used for other significant affairs of life. LOW-INTEREST RATE- The maximum number of balance transfer in our country is done to gain the benefit from the interest rate which has been decreased recently. If you have taken the home loan 5 years ago, you must have been paying an interest rate of 9% to 10%. But the present home loan interest rate starts from 8.3% which is much lower than that. So by going for a balance transfer, one can easily save a lot in total interest payment. BETTER TOP-UP- A top-up loan is one of the benefits of Home Loan Balance Transfer. A top-up loan is more or less like a personal loan which can be used for any purpose. But the difference comes in the rates and convenience. A top up loan is taken on the basis of the existing home loan hence the processing of the loan becomes hassle-free and faster. Moreover, a top-up loan is always cheaper than a personal loan.
ENHANCES CREDIT SCORE- A balance transfer is used as a tool to enhance credit score. With a balance transfer, a person has to pre-pay the older loan and starts a new credit account. This activity makes a person’s credit score take a leap. When It Makes Sense To Go For A Balance Transfer? It is true that a balance transfer is done to gain profit on home loans. But the worthiness of balance transfer depends on a few factors. If a person wants to gain maximum benefit from the balance transfer he must take care of the given points. THE TENURE LEFT- The home loan balance transfer works better if the transfer is done in the early period. Let’s say, a home loan which was taken for 25 years and if the balance transfer is done after 20 years then the profit will be very nominal. It may not be worthy to take the hassles of prepayment if more than three fourth of the total tenure has already been serviced. THE OUTSTANDING PRINCIPAL AMOUNT- Even it matters a lot how much of principal amount is yet to be paid. The same ethics of tenure apply to the outstanding principal amount. Along with each paid EMI, some amount of principal and some amount of interest is deducted. One must check the outstanding principal amount before applying for a balance transfer. With a high outstanding amount, the profit is going to be more. THE CHARGES- Earlier there was a prepayment penalty which a home loan borrower had to pay in case of prepayment. But recently RBI has instructed lenders not to impose any penalty if the loan is at a floating interest rate. But a borrower still has to pay a balance transfer charges to the new lender. The balance transfer charges depend on the lender. Every lender has different amount which is charged in case of balance transfer.
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Home Loan Balance Transfer- Is It Worth it

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