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`Home loan balance transfer` option for availing lower interest rates and EMI: Here is everything you need to know
RBI has removed foreclosure penalities. As per new RBI guidelines, borrowers can avail a home loan balance transfer if he/she gets lower interest rates by other lenders.
Highlights
- Customers can opt home loan transfer from one lender to another.
- It allows many benefits including low interest rate, low EMI, etc.
- New RBI guideline prohibits lenders to penalise borrowers for foreclosure.
New Delhi: Feeling a pinch for paying a higher rate of interest for home loan and wanting to switch the lenders. You should know that there is an option available called home loan balance transfer. Borrowers can opt to switch the lenders in very easy and convenient way. A balance loan transfer means you transfer the existing loan or remaining amount from one bank to another.
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What are new RBI guidelines?
RBI has removed foreclosure penalities. As per new RBI guidelines, borrowers can avail a home loan balance transfer if he/she gets lower interest rates by other lenders. If done wisely, this reduces EMIs and makes the home loan much more affordable.
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Now lending institutions can’t levy a penalty for foreclosure or prepaying home loans. Earlier, borrowers avoided prepaying a loan because of higher prepayment charges.
Home Loan Balance Transfer Benefits
Low Interest Rates
It’s simple and obvious. Low interest rate is the main thing that attracts customers to toggle their lenders for home loan balance. If an existing loan carries a higher interest rate, a loan balance transfer is a good option.
Low EMIs
The interest rates for the loan are determined by the applicant's eligibility and credit history. Banks and lenders provide enticing interest rates if the credit rating is strong. This aids in lowering the remaining loan's EMI.
Home Loan Tenure
A home loan transfer also offers the opportunity to revise the tenure as the interest rate is decreased on the remaining principal amount. A loan balance transfer helps in shifting to better loan tenures. Home loan balance transfer or refinancing could help in reassessing the tenure.
Top-Up Loan
Top-Up Loan provides an option to finance a new home or renovate the existing property or something else. In case of more funds, this option is a very beneficial one. Most lenders offer a top-up loan facility at attractive interest rates over and above your existing loan.