Home loans are high-value advances where the repayment tenor can extend up to 20 years. According to 2019 reports, out of outstanding Rs. 22.5 Lakh Crore disbursed in retail credit financing across India; home loans account for more than 50% at Rs. 11.8 Lakh Crore. Consequently, financial institutions offer different user-friendly features to aid customers in clearing their debts.
Among the numerous features offered by financial institutions to aid borrowers in clearing their line of credit easily, a home loan transfer is a crucial one. The importance of this facility for borrowers is summed up in its salient features. These do not just aid in loan repayment but also offer multiple benefits in case relevant demanding situations arise. The benefits and importance of this home loan facility are discussed underneath.
Importance of Home Loan Balance Transfer:
- Lower rates of interest –
The most crucial benefit offered by the balance transfer facility is that of lower rates of interest on the credit availed. It allows for affordable repayment through reduced EMIs. It is important for customers to take note of the relevant charges and calculate applicable expenses via a home loan transfer calculator and proceed accordingly.
Usually, financial institutions offer this facility with a nominal processing charge which can go up to 1% of the loan amount along with relevant taxes.
- Top-up loans –
Of all a borrower who needs to know about top-up loans on home loan balance transfer, the availability of hassle-free credit remains its stand-out feature. Any borrower who transfers his or her account can avail a top-up loan reaching up to Rs. 50 Lakh over and above the actual loan balance.
- Reframing the repayment structure –
Borrowers can reframe their repayment structure and change the previous EMI payment plan. With lower rates of interest, they can prepay easily and reduce tenor to avail further reduction on applicable interests. Top-up loans can also be factored in to reframe this repayment structure.
- Zero prepayment charges –
Prepayment allows a customer to clear a part or whole of his/her home loan amount with a lump sum payment. It allows borrowers to save significantly on interest payment. Few financial institutions offer this facility without any additional charges.
Customers should, however, read about all important factors to keep in mind when prepaying their home loan after a balance transfer.
- Online management –
Transferring a loan account to a convenient financial institution grants customers online access to every aspect of their loan account. They can essentially access their previous transaction details, account balance, repayment structure, EMI breakdown, etc.
Another crucial aspect of online management after home loan takeover by a new financial institution is that of easy payment of EMIs.
Usually, online management of an account allows customers to repay their EMI by multiple payment methods. They can also link their loan account to personal accounts direct debit of EMIs.
- Additional insurance cover –
Specific financial institutions offer the option to avail an insurance cover along with home loan balance transfer. Additionally, some NBFCs also allow their customers to customise their insurance plan to suit their specific needs.
The application procedure for this facility is extremely easy, much like the usual application of home loans. After an interested borrower has checked with an online eligibility calculator, he/she can straightaway apply on the relevant financial institution’s official website.
Understanding the importance of facilities like home loan balance transfer, borrowers should keep one thing in mind. When transferring their loan account to a different financial institution, they should make it a point to be prompt with EMI repayments. It ensures they do not have to pay extra as penalty charges, which can go up to 2% per month.