As per the Reserve Bank of India, the outstanding amount on home loans increased by over Rs.1.14 lakh crore ending November 2019. Although the growth rate in this loan segment for FY 2019-20 saw a slowdown, home loans still grew at a steady pace.
Add to it the subsequent cuts in repo rate by the RBI, and home loans are expected to get cheaper in the forthcoming months. Such rate cuts can benefit a borrower big time. Further, facilities like home loan balance transfer also bring the potential for increased savings by lowering interest rates.
Availing a balance transfer facility can bring multiplied benefits if appropriately timed. So, here are a few instances mentioned when you can avail a loan balance transfer to maximise benefits from this facility.
Ideal Time to Avail a Balance Transfer Facility on Home Loan:
During possibilities of interest rate reduction in the future
As mentioned above, rate cuts can significantly impact the total loan liability a borrower needs to repay. Hence, it is ideal to go for balance transfer while there exists a possibility of further rate reduction or there has already been one in place recently.
Another consideration when planning for a home loan balance transfer is the selection of the lender. A suitable lender would be the one that offers low-interest rates with the widest difference from the existing rates at which you pay. Shifting to lower interest rates is also a step towards effective home loan management.
Selection of such a lender can be conveniently made with the help of a home loan balance transfer calculator. You can find one on the official website of leading home loan providers.
When the outstanding loan tenor is long
Availing a home loan balance transfer facility is also suitable when your advance is in its initial stages. It is because a long tenor leaves a wider scope to save on interest payment.
For instance, consider the interest rate with your existing lender is 10% and the outstanding loan tenor is 15 years. Opting to switch it to another lender offering an interest rate of 8% can save you on interest payment at a significant 2% for 15 years.
Another reason why opting early is advisable is because, towards the near end of a loan tenor, the interest component of EMIs payable is lower than the loan principal. Thus, an early transfer would mean more savings and vice versa.
When the refinancing facility is affordable and convenient
It is advisable to opt for a balance transfer or home loan refinance facility from another lender offering friendly terms at affordable costs. It would make for convenient loan management. Before choosing the facility, you must analyse all the costs involved and the terms offered.
A few lenders bring the transfer facility at nominal charges along with borrower-friendly terms such as transfer within 4 days, flexible repayment options, etc.
Also Read: Know the Easy Steps for Home Loan Transfer
In addition to the above, top-up loans are another critical benefit that can be the reason to opt for a balance transfer facility. Although not aligning with the timing factor for such transfer, opting for a home loan balance transfer facility with some lenders can fetch high-value funding over and above the existing loan balance. More so, the amount comes with unrestricted end-use and can be utilised for any purpose as the borrower deems fit.
As for the home loan balance transfer facility, once you have identified the right timing for such refinancing, you can proceed to apply for it with the selected lender. Check for financiers facilitating online applications and requiring minimal documents for processing.
Similar Read: Easy Methods to Calculate Your Home Loan EMI