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Home Loan Balance Transfer
When and How to Opt for Home Loan Balance Transfer or Refinancing?
Home loans are typically one of the lowest-interest loans available in India and a multitude of banks and financial companies offer them at varying interest rates along with other benefits. A premier digital loans marketplace like Fincity eases out the often-tedious process of comparing and choosing the right home loan offering for you with the lowest interest rate (as low as 6.70%), optimal amount and tenure. Let’s say you have an existing home loan and want to transfer the balance to another lender after evaluating the EMI you may save by doing so, or simply because you want to avail of other facilities like a loan top-up. You can easily do that via Home Loan Bank Transfer. The documentation is similar to applying for a fresh loan but relatively simpler. But first, estimate the pros of carrying out this balance transfer with the help of Fincity’s Home Loan Balance Transfer calculator. Simply enter details such as outstanding loan amount, tenure, interest rate and processing fee and you’ll get a clear view of the amount you will eventually save by transferring your loan balance to another bank.
To break it down, one should opt for a Home Loan Balance Transfer:
If you are paying off a loan at a higher interest rate than the one you want to transfer to.
If you want to avail of other benefits offered by the other bank such as loan Top-up.
These when compared to the current EMI amounts and tenure will tell you how much you’ll save monthly and in total.
Once you transfer the Home Loan balance to another bank offering a lower interest rate, either the EMI will reduce and the tenure will remain the same or the EMI will remain the same and the tenure will be shorter. In either case, you will save money!
Note : Processing fee stands at 0.12 -2% of the loan amount; it’s important to keep an eye out for other additional (hidden) charges and then decide if you’re still benefitting, all charges considered.
BANK
INTEREST RATE
PROCESSING FEES
7.85% onwards
0.125% of the loan amount with a min. of Rs. 500 & a max. of Rs. 5000
Note : The interest/processing details are subject to change at the lender’s discretion and based on RBI directives.
Calculating EMI on Home Loan Balance Transfer
How much you may save depends of factors such as:
The interest rate at which the lender is offering the loan
If you are paying off a loan at a higher interest rate than the one you want to transfer to.
These when compared to the current EMI amounts and tenure will tell you how much you’ll save monthly and in total.
Let’s assume that you have an outstanding principal amount of Rs.50 lakhs at 8.6% interest rate payable for a tenure of 20 years. In this case, your monthly EMI is Rs.43,708. If you transfer your loan balance to another lender offering an interest of 7% for the same tenure, your monthly EMI comes down to Rs.38,765. The total amount you pay towards the loan reduces from Rs.1,04,89,954 to Rs.93,03,589.
Note : When you decide on a balance transfer, the current lender may try to retain you by offering a desirable interest rate (less than what you are currently paying). In such a case, it’s advisable to check if you will end up saving a reasonable amount with the current lender.
Eligibility Criteria
Home Loan Balance Transfer facility is available to all salaried and self-employed people but lenders may have unique criterias in place. Some common ones, however, are:
Steps to Home Loan Balance Transfer
Here’s a quick guide to steps involved in obtaining a Home loan balance transfer:
Documents Required
Documents are the most vital part of the application process with the new lender requiring you to provide them with all the documents you had submitted during the initial loan application. These documents are vetted by the new lender to evaluate your capability to repay the loan. Although some lenders may ask for more documents, these are some of the important documents most lenders will require from you.
If you’re ready for this new shift in home loan lender, Fincity can help you with your Home Loan Balance Transfer. Our expert financial advisor will help you with the right lender to choose to minimize your EMI payments and maximize savings from this balance transfer.