Know What a Home Loan Balance Transfer is and its Purpose - Loan Trivia

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Monday 24 January 2022

Know What a Home Loan Balance Transfer is and its Purpose

home loan balance transfer

Have you heard about the concept of the home loan balance transfer? 

If not, then you can go through this quick article and know its basics. 

What is a home loan balance transfer?

As the name suggests, a home loan balance transfer happens when an existing housing loan customer transfers an ongoing loan to a new lender offering a lower rate. The basic purpose of a home loan balance transfer is to save on interest charges and pay reduced EMIs. When you see home loan rates going down and your lender still not readjusting yours, you can switch your loan to a new lender with a reduced rate. 

What are the benefits of a home loan balance transfer?

  1. A lower rate of interest 

The biggest benefit of a home loan balance transfer is to avail of the lower rate of interest being offered by a new lender. Once done, an existing housing loan customer begins to save on interest costs and pay lower EMIs. 

  1. Prepayment and foreclosure facility at zero cost 

The prepayments and foreclosure of the loan at no extra charge when you switch to a new lender makes it worth applying. 

  1. Sizeable top up loan amount

Once you go for a home loan balance transfer, you can also avail of a high value top up loan with your new lender. This amount is above and over your active home loan. You can use it for anything as per your needs without restrictions. The rate of interest and the tenor of a top up loan is less and longer. Hence, if you were to apply for a personal loan to cover needs, you can use a top up loan and pay lower interest charges. 

If you are still facing the issue of a higher interest rate, then a home loan balance transfer is among the best bet.

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