Borrowers can transfer their existing home loans to a different lender if they are being offered better terms. This change is called a home loan balance transfer. It is quite common to find a lender offering better terms on your existing home loan. Hence, if the switch seems beneficial, it is advisable to go for it. The remaining amount gets transferred to the new lender. It does not always have to be about money though. Sometimes, borrowers are just unsatisfied with the service they are receiving from their current lenders and decide to switch to different financial institutions.
Here are 5 benefits of opting for a home loan balance transfer and switching lenders:
- Receive a top-up loan
The new lender can also offer a top-up loan when you opt for a home loan transfer. This is beneficial if you are in need of funds. The top-up loan amount has no restrictions on usage, so you can use this amount for any personal expenses.
- Enjoy a lower interest rate
Most of the home loan transfers taking place are because of the difference in the interest rates offered by the previous and new lenders. A slight change in the housing loan interest rate can make the repayment a lot easier. Since market rates are much lower compared to previous years, it is quite possible to find a new lender offering a better home loan balance transfer interest rate. This is where a loan transfer can save you a significant amount of money.
- Change the repayment tenure of the home loan
One reason for choosing a housing loan transfer is to change the tenure for repaying the loan. If you are looking to clear the repayment of the loan sooner, the new lender can offer a reduced tenure period. It could also be the other way round where you might want easier EMI payments in which case the lender can offer a longer tenure too.
- Get better deals with an improved credit score
There are many cases where borrowers have taken housing loans when their credit scores were average. This is where a lot of them get stuck with high interest rates. Therefore, when their credit scores finally improve, they opt for home loan transfers as the new lenders offer them better terms after evaluating their improved credit scores. For instance, with a better credit score, it is possible to get a lower interest rate or a better repayment tenure.
- Access better services offered by the new lender
It is possible that you will not be satisfied with the service offered by the current lender. This could be about the customer service, pre-payment terms, or anything else. If the new lender is offering better services, opting for a loan transfer is always an option.
So, these are the advantages of opting for a home loan transfer. To make sure this transfer is a smooth process, always check with the financial institution regarding the documents required for home loan transfer.