Home Loans have been the mainstay of millions of prospective homeowners as their go source of arranging required funds to make their dreams of owning their own homes a reality. Majority of the banks in India offer a lucrative rate of interests and many more additional benefits to the average middle class Indian, which in turn helps them achieve one of their biggest milestones at their respective phases of lives.
In the current scenario, the benefits of availing a Home Loan far outnumber the disadvantages. First of all, you get to live in your own house at the onset of your Home Loan and after any given period of time, the value of your property is bound to be more than what you have invested in it at the very beginning. Apart from the obvious advantages, the Indian Government offers tax benefits on Home Loans which will offer monetary compensation once you file your income tax returns at the end of the financial year. Also paying monthly equated monthly instalments (EMIs) will avoid making a dent on your pocket in the short run so as to offer you considerable control over your finances.
After going through the above facts, it becomes quite clear that Home Loans are lucrative markets for all the major banking institutions in our country and most of them will be vying for your business by making their offerings more lucrative. Home Loan Bank Transfer allows them to fiercely compete for the borrower’s attention.
As the name suggests, it facilitates the transfer of an outstanding Home Loan from the existing banking facility to a new one which ultimately means that you will continue to cough up your EMIs but to a new lender who is willing to offer you better terms (in most cases, lower interest rates) than the existing baking institution.
Some features of the Home Loan Balance Transfer are listed below for the understanding of an average Home Loan consumer:
1. Usually, the banks will levy minimal to no charges at all to get you on board which will take effect after you complete all formalities related to the documentation.
2. Any borrower can Avail Home Loan Balance Transfer after a particular period of time only which can range from three to five years ranging from one financial institution to the other.
3. In case you have been inconsistent with your repayments, it is very likely that your transfer of balance might get rejected. A positive repayment record will prioritise or increase your chances of switching banks.
4. As applicable to almost all cases of availing Home Loans, credit score/CIBIL scores would play a pivotal part in getting your applications approved with the relevant authorities.
5. Top up Loans: After you switch to the new bank, they might offer you a certain amount as top-up loans which can be used to either repair or refurbish your home or to pay off your debts quickly. This is usually offered while taking into consideration the current market rate of your property.
6. In case your track record of paying your EMIs on time is excellent, you can negotiate hard with the new bank to obtain an even better rate of interests and some additional benefits pertaining to the tenure etcetera.
While the above-mentioned advantages are compelling in their own right, we recommend you consider the following limitations as well, before signing on the dotted lines:
1. Majority of the banks will try and offer you their products in addition to the Home Loans which can include a Credit Card, an accident insurance, and so on. Carefully assess if you really require them since they can do more harm than good if not availed properly.
2. You should carefully read the terms and conditions before finalising the agreement as it may come with certain prerequisites such as availing the property insurance form only a certain vendor or opening multiple accounts with the respective bank. Carefully check whether these terms and conditions are in line with your discussions with the bank executives.
3. Carefully study the initial signing fee or transfer charges and try to negotiate them into reducing or completely waiving off the charges.
4. Before switching banks, you should take help from the loan calculator tools available online to get a rough estimate of the total outflow. It will give you an idea of whether you should switch banks or pay off the existing Home Loan by paying a higher amount as EMIs.
Finally, to sum up, most of the Benefits of Home Loan Balance Transfer will surely outweigh the cons of not doing so, but one must carefully analyse how doing so will affect their long and short-term financial planning. Paying a lower amount of interest rate itself might not necessarily justify your decision to make a switch from one financial institution to the other; hence it is advisable that you ask all the right questions while taking a decision.
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