Is it Possible to Balance Transfer a Top-up Home Loan to Another Lender?

Updated on: 17 Jan 2024 // 4 min read // Home Loan Balance Transfer
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Buying a home in present market conditions is an arduous task for most of us. It is due to the ever-increasing prices of the residential real estate properties across all cities in India. As a result, there is no way for you to purchase a residential property without applying for a Home Loan, as your savings will not suffice for an outright purchase. As you must be aware that a Home Loan is a secured loan which is offered by various financial institutions, the residential property that you acquire with the loan is mortgaged with the lender.And you must repay your EMIs (Equated Monthly Instalments) to enjoy peaceful possession of the house.

The usual tenure of a Home Loan ranges from 20 to 30 years,and rate of interest varies between 8.30% to 11%, depending on the lender you choose. Buying a property with a Home Loan is a significant financial commitment as you will be serving the EMIs for a large part of your working life and the EMIs will form the most significant expense in your monthly budget. Due to the sheer duration of the Home Loan, a slight reduction in the interest rate can materialiseinto significant savings for you. As all lenders want a customer who pays EMIs on time, so it is indeed possible for you to balance transfer Home Loan to a new lender who is offering lower interest rates and better repayment terms.

Offers on Home Loan Balance Transfer

What is a Home Loan Balance Transfer?

Home Loan Balance Transfer is a process through which you transfer your existing Home Loan to a new lender due to any reason. The main reason behind balance transferis lower interest rates. When you opt for this facility, the new lender will repay the entire dues to your existing lender,and you will now be servicing EMIs to the new lender against the new Home Loan. In order to Find a Home Loan Balance Transfer Offer, which is suitable as per your preference, you need to conduct extensive research before taking a final decision.

Can You Balance Transfer a Top-up Home Loan to Reduce Interest Cost?

When you have been repaying your EMIs for a number of years, there will be a stage when the market value of the property is higher than the loan amount outstanding. In such cases, if you are repaying your EMIs on time, yourHome Loan provider also offers you the option of a Top-up Loan. This is a secured loan which is provided by extending the existing mortgage on your residential property and can be used for any purpose that you may have.

If you know that the interest rate being charged by your lender is on the higher side than what is prevailing in the market,and there is still a considerable repayment period left, then you must consider the option of Home Loan Balance Transfer. The answer to the question “Can You Balance Transfer a Top-Up Home Loan?is – Yes, you can, and you must opt for a balance transfer of a Home Loan including the top-up loan amount to reduce your interest costs.

Benefits for Top-up Home Loan Balance Transfer

When you finally take a decision regarding the balance transfer option, there are a number of advantages that you stand to enjoy, such as:

1. Lower Interest Rates

This is one of the biggest reasons for a balance transfer. As interest on Home Loans has reduced significantly over the last few years, you must decide to transfer your loan which is running at a higher interest rate. If you are availing a top-up loan from your existing lender and you transfer it to a new lender, the interest on the top-up loan is also reduced significantly.This will help you in saving a lot of money which would otherwise have to be spent on interest expenses.

2. Better Services

If you are not satisfied with the attitude of your lender, then you should opt for a balance transfer of your home loan as the new lender will be offering you better services and would be more attentive to your needs.

3. Reduced EMI amount

By choosing for the balance transfer option, your EMI amounts are reduced significantly. This reduces the burden on your monthly financials,and you can use the spare money for some other requirements of yours.

4. Restructuring of Loan

A balance transfer Home Loan is almost like a new loan with a new EMI structure. You have the option to opt for the number of EMIs as per your preference. If you feel your financial situation allows you to make higher repayments, then you can choose to lower the number of EMIs, so that the loan could be repaid quickly.

5. Improvement of Credit Score

When you opt for a Home Loan Balance Transfer, your existing Home Loan account is repaid in full by the new lender. This helps in improving your credit score significantly as it equates to pre-payment and indicates your financial strength. Opting for a Home Loan Balance Transfer is a useful option when you are looking to reduce your monthly installments and save money on the interest costs.