Home loan has played a big role in helping people fulfill their dream of owning a home. The tenure of home loan can be from 15 to 30 years. Therefore, even small changes in its interest rates have an impact on the customers’ pockets. For this reason, many home loan takers think about transferring the home loan balance. This means that the customer transfers his loan to the bank whose interest rate is lower. The question is how beneficial is it to do so?
The biggest advantage of home loan balance transfer
Home Loan The biggest reason for transferring the balance to another bank is the difference in interest rates. This can be easily understood with the help of an example. Suppose currently you are paying 9 percent interest on your home loan. Another bank is offering you home loan balance transfer at 8.5 percent. This is a difference of only 0.5 percent. But, if your home loan is for 20 years, then you can save lakhs of rupees by this 0.5 percent difference in interest rate. If it has not been many years since you have taken a home loan, then you can get a lot of benefit.
Fees for home loan balance transfer
Now the question is whether there is any fee for home loan balance transfer? The answer is no. The bank may charge processing fees, legal fees or valuation costs on home loan balance transfer. If you have paid a significant portion of the loan and your loan is about to expire, then transferring your home loan balance will not be of much benefit to you. Therefore, before deciding to transfer home loan balance, you have to do the calculations properly.
Balance transfer for better service
Many times home loan customers transfer their balance not for lower interest rates but for better service. Another bank may offer easy repayment options to the customer. He may offer less penalty on prepayment. The new bank can give you a better banking experience.
What should you do?
But, these are not the only benefits for which you should take the decision of home loan balance transfer. The biggest benefit is your expense on interest. If you get huge savings in terms of interest by transferring the loan then only you should decide on balance transfer.