Home Loan Balance Transfer: How Does it Help? - Loan Trivia


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Monday 31 December 2018

Home Loan Balance Transfer: How Does it Help?

Thanks to the introduction of MCLR lending pattern, a home loan has become an affordable financing option for people buying a house. Plus, to make the process further easy, the government introduced the PMAY housing loan and the PMAY CLSS.

Collectively, all this has made the home buying easy and affordable. But, things weren’t this easy for home buyers who took the plunge before April 2016. The interest rate for home loans was the highest possible in this decade. For a gist, the lowest interest rates on home loan were around 10% per annum which is approximately 8.6% at present. Thankfully, with the launch of MCLR came the home loan balance transfer facility which allowed existing homeowners to get their property refinanced through MCLR - based home loans after paying a nominal transfer fee.

Now, this facility can be used even in present times by home buyers to switch from a high-interest rate loan to a low-interest rate loan and save a considerable amount.

What is Home Loan Balance Transfer?

Home loan transfer or refinancing, whichever you would like to call it, allows existing home buyers to get their purchased property refinanced at a lower interest rate, by a new lender. However, opting for the said facility literally means going through the same loan processing and approval process again. Thus, contemplate your decision before opting for the said facility and make sure there is no other better option left. Also, calculate the cost of balance transfer to find out if you are actually saving any money.

Bottom Line: The best way to make sure the housing loan you are taking remains conducive rather than turning into a burden is by applying for the best schemes in the first place. Hence, do some research before applying for any random housing loan.

Reference Read: Tips to Reduce the Burden of Higher Interest Rate on your Existing Home Loan

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