Check These Key Factors Before Availing Home Loan Balance Transfer

Opting for a Home Loan Balance Transfer? Know the Factors to Consider

Borrowers usually opt for a home loan transfer if the interest rates on their existing loans are too high, or there are hidden charges that increase your overall cost. Keep reading to know how a home loan balance transfer can help and the factors that you must consider before taking this option.

Usually, banks lure customers by showing additional perks on a balance transfer. But, is it feasible to transfer a loan? Let’s discuss the reasons for a balance transfer and the factors you must consider before choosing this option.

When Should You opt for a Home Loan Balance Transfer?

Interest Rate
One of the biggest reasons for a home loan balance transfer is the difference in interest rates. Interest is the major component in a home loan because of the long tenure of such loans. Therefore, even a slight difference in the interest rate can save your hard-earned money considerably.
Adjust Your Loan Tenure
With ICICI Bank home loan balance transfer you can opt for a tenure of upto 20 years. It may be difficult to predict your finances for such a long time. You may face a financial crunch which may make it difficult for you to pay theEMIs. On the other hand, a promotion at work could mean you can offer a higher EMI. A balance transfer allows you to re-adjust your home loan tenure and keep a check on your finances.
Reduced EMIs
A reduction in the home loan interest rate or increase in tenure can reduce the burden of monthly payments on your pocket. You can use the saved amount to meet your expenses or make additional high-value investments.
Additional Funds
ICICI Bank also offers top-up loans along with a balance transfer facility. If you need additional funds for the construction or beautification of your house, then this option might suit you.

What Factors Should you Consider before Transferring your Home Loan?

Home Loan Interest Rates
Before you take the decision of shifting your home loan, you must negotiate with the current lenders. If they match the reduced rate, it may be better to stay.
Balance Repayment Period
Most of the interest is paid during the initial years of a home loan. Hence, if the remaining tenure on your current loan is less than 10 years, it is not advisable to switch the home loan unless the interest rates are significantly lower
Tenure
Generally, it is advised to keep the tenure unchanged until you want to reduce your EMIs significantly. Though the increase in tenure also increases the interest amount that you pay to the bank.
Documents Requirement for Home Loan
Make sure you check the documents requireds with the new lender. You will need to resubmit home loan documents with the new lender, which can be tedious. Make sure your documents are in order before you decide to go ahead with this.
It is important to analyse the benefits and costs of a home loan balance transfer. Only when you are satisfied should you go ahead with the option. If you play your cards right, a home loan balance transfer can help you save quite considerably.