For most people, a home loan is the only way of affording a property purchase. Now, while a home loan provides the required finances to buy a house, lenders also levy a certain interest rate on it. This interest rate is not fixed and keeps changing. So, if you have taken a home loan a few years back and now find home loans with cheaper interest rates, you can opt for a home loan balance transfer. For those who are not aware of this, it involves refinancing a home loan plan from one lender to another for better benefits. Once the current lender receives payment for the outstanding loan amount, they will then hand over the property documents and all the required statements for the transfer.

If you are not familiar with this concept, read on to learn about how a home loan balance transfer can be beneficial:

1. You get a lower home loan balance transfer interest rate

This is not the only reason, but definitely one of the biggest ones because of which borrowers opt to transfer their home loans to new lenders. Managing to reduce the interest rate by even a small margin can make quite the difference to your home loan’s monthly instalments and effectively save money on the overall cost of the loan. This will help in reducing the burden of your debt every month. This is why you should focus on the home loan balance transferinterest rate while refinancing your home loan. You can use a home loan balance transfer calculator to learn about the revised EMIs, which will help in understanding whether the new interest rate has been effective. 

2. The new lender can offer much better terms

Apart from the interest rate, borrowers can also get other beneficial terms from their home loan balance transfer. For instance, if you are currently struggling to repay the home loan EMIs, you can refinance your home loan to a lender that offers a better repayment tenure. This can make your EMI payments towards the loan much easier.

3. You can also get a top-up loan

Many borrowers are unaware of the fact that they can also get a top-up loan while transferring their home loans. To entice customers, it is not uncommon for lenders to offer borrowers top-up loans as part of the home loan balance transfer. Do note that it is important to check the interest rate that the lender offers for the top-up loan.

After reading this, you will realise that refinancing your home loan is not just about getting a lower home loan interest rate, but much more than that. In addition, before going ahead and applying for the home loan balance transfer, it is important to first make use of a home loan refinance calculator. This calculator is a tool that will display the revised home loan EMIs, based on which you can decide whether the repayment plan is suitable to your budget.