Living in your own dream home is the dream every person has. The banks such as HDFC Bank, AXIS Bank, ICICI Bank, Kotak Mahindra Bank, Ratnakar Bank and the financial institutions such as Bajaj Finance, Edelweiss Home Loan, Cholamandalam Home Loan etc. have extended their services to provide the home loans to the customers. The home loans are the very important feature of the banks, financial institutions and NBFCs.
The home loan is being provided at the affordable interest rates and for the longer duration. The home loan interest rate varies from 8.5% to 9.75%. The customer can assess the various terms and conditions offered by the lender and chose the best deal. The customers chose the options of “Equated Monthly Instalments”, famously known as EMIs to go ahead with the repayment schedule.
The customers always look for the different ways to reduce the burden of the loan. The balance transfer is the most appropriate and famous way to reduce the home loan burden. The customer chose to transfer the balance to another bank or lender, which offers the lower interest rate than the current lender. Today, almost every bank of the country and almost each & every financial institution provides the facility to transfer the balance for home loans.
If the customer holds a good credit rating and has a strong financial background as far as repayment of loan is concerned, the balance transfer becomes easy. However, the before opting for the balance transfer, the customer has to carefully evaluate all the parameters offered by the new lender so that the proper cost and benefit analysis can be carried out for the betterment of the client. If the client does not go ahead with the proper evaluation of the same, the client may end up paying more than he or she is supposed to pay to the current lender. Also, the customer should check the various processing fees and the charges offered by the current lender and prospect lender.
Also, another thing, which has to be noticed is that the balance transfer always depends on the rate of interest which is offered by both the banks, the tenure for which the loan is unpaid and the amount of loan which is to be paid. If the loan amount which is to be paid is low, then the customer should not opt for the balance transfer. However, if the customer is supposed to pay larger amount in terms of loan, then the customer can certainly opt for the balance transfer and chose the best deal which has been offered to him or her.
The balance transfer is proven to be most beneficial when you are in your early stage of paying the home loan. For example, if you are yet to pay 50,00,000 rz for the home loan and the current interest rate is 12%, then you are supposed to pay around 58,20,513 rz as the interest. However, if you chose a new lender according to the balance transfer and the new interest rate, which is being offered to you is 11.5%, then the interest which is to be paid by you over 15 years will be around 55,13,710 rz and hence the total saving, which will be there in your kitty will be around 2,87,000 rz. The interest rate is the trickiest part as far as the loans are concerned. Hence, of the customer can manage to get the option in terms of lender to reduce the burden, it can be proven the most effective.
While opting for the balance transfer, you have to pay the processing fees and other related fees. Also, you have to ensure that the proper documentation work is done for the process. The bank approves the balance transfer on the basis of your background and credit history. Hence, the customer has to ensure that he/she holds the proper history and also while going ahead with the transfer, the customer should get back the related loan documents from the old lender. The properly sanctioned home loan and appropriate balance transfer can help the customer not only to reduce the monthly burden to pay off the EMIs but also, it helps to reduce the burden to pay off the principal amount. The slight change in the offered interest rate can be helpful in saving the larger amount for the customer and hence, the saying “Penny saved is a penny earned” is proven appropriately right in the case of balance transfer.