Home loan balance transfer refers to a facility through which the existing balance of a home loan can be transferred to another lender offering a lower interest rate. This can effectively reduce the overall monthly repayments and total payable interest. However, it is not so simple. There are several things to consider before the borrower chooses a loan transfer. This article aims to shed light on such factors. 

When should one choose a home loan balance transfer?

Here are a few circumstances that can be ideal for a loan balance transfer for home loans:

Interest rate lowered

If the loan seeker’s existing interest rate for home loans is high, they can consider a home loan balance transfer. They can find a lender offering a lower interest rate on a home loan, which can help reduce the overall cost of the loan.

Better repayment terms

If the borrower finds it difficult to repay a high monthly EMI they can transfer the loan balance for a better term. For instance, they can opt for a lender offering longer tenure, lower EMIs, reduced processing fees, etc. on home loans. 

Improved credit score

If the borrower’s credit score has improved since they applied for the first home loan, they may be able to get a better interest rate on a balance transfer. CIBIL score for home loan is considered good if it ranges between 650 and 750.  

Dissatisfied with existing lender:

A borrower must avail a housing loan if the terms and services of the lender are well-managed. However, if they are dissatisfied with the current plan, it could be a good time to consider transferring the loan to a new financer. 

In essence, a home loan balance transfer can be an effective way of financial management and savings. However, it is important to assess one’s financial condition, compare interest rates and fees, consider the impact on credit scores, as well as research the potential new lender before making a decision. Finally, the borrower should consider going through the process after weighing the benefits and costs of a balance transfer and what’s right for them.