How Does Home Loan Balance Transfer Facility Help People in Saving Money?

Home Loan is one of the popular loan options among customers who want to purchase a home for them. Home loans are generally offered to people at lower rates than other secured loans. But sometimes, people want to save on their home loan amount through various methods. Some of these methods can be applied before taking the home loan (choosing lower rates, higher down payment, etc.) while some can be applied while you have taken a Home Loan. One of the methods is Home Loan Balance Transfer Facility.

So, what does this facility bring to the table? Well, with this facility, customers can easily transfer the principal outstanding balance to some other lender at lower interest rates. This can be beneficial for those individuals who are struggling with high-interest rates on Home Loan and want to enjoy the lower rates. Due to the lower interest rates, people can save both in terms of EMI amount and interest outgo. So, you can understand how the Home Loan Balance Transfer facility can help people who want to switch lower interest rates. In this article, we will cover everything related to the Home Loan Balance Transfer facility so that you can understand it better.

How can you apply for a Home Loan Balance Transfer Facility?

Well, you must want to know about how you can apply for the Home Loan Balance Transfer facility. Almost every lender provides this facility to customers. But there is one thing you need to remember, lenders, ask for a fixed charge from the lenders when they want to apply for this. This charge tends to change from one lender to another and depends on the principal outstanding balance. There are a few things lenders check before sanctioning their request for Balance Transfer. We are showing them below. Have a look.

• Lenders always check the credit score of an individual. People with high credit scores have a higher probability of getting this facility as compared to lower credit scores. 

• Lenders also check several things related to your property such as your overall prices, location, etc to finalize their decision about approval. 

• Customers should opt for the Balance transfer Facility in the initial years of their loan to save the interest outgo as it tends to be higher during the initial years. Like, if your home loan is for 15 years then it would be wise to opt for the Balance Transfer facility within the 5-8 years of the loan.

How much money can you Save with a Home Loan Balance Transfer Facility?

As we said, the Home Loan Balance Transfer facility allows customers to save on EMI amount and interest outgo. Let’s understand this with an example. Suppose an individual has opted for a 15-year Home Loan of INR 30 lakhs at an interest rate of 8.75% per annum. For this, the EMI amount is INR 29,983. Now, the individual wants to opt for a Balance Transfer after 6 years at a new interest rate of 7.50% per annum.

The outstanding balance at the end of 6 years is INR 22,35,775. With the new interest rates of 7.50% per annum, the EMI amount would be INR 28,531 and the total interest outgo will be INR 22,40,131. So, you can see that you can save around INR 1,452 per month on the EMI amount and interest savings of INR 1,56,892.