It’s a dream for many to buy their own home. However, not everyone is rich enough to buy a house as it needs huge investment. That’s where home loans come to your help and make the process much easier. Home loans serve as one of the best credit facilities available to buy a new house.
However, in recent years the interest rates on home loans have gone up leading to higher EMIs. This has increased the financial burden on home loan borrowers. If you are looking for options to ease your home loan burden a few options, like home loan balance transfer, may help you.
What is a home loan balance transfer?
The home loan tenure can extend up to 30 years and currently most of the banks offer home loans at 8.4 to 10 per cent interest rates. The lower interest rates for home loans are a result of various concessions offered by different banks. Therefore, the numbers could vary in the future.
The interest rates have seen a significant jump in the last two years. In mid-2021 the average home loan interest rate was around 6.70 per cent, which has now gone up to 9.15 per cent.
Home loan balance transfer can be a helpful option to ease the burden of higher interest rate and EMIs.
A home loan balance transfer refers to transferring your home loan from one lender to the other. This decision would be beneficial in case the existing lender is charging a higher rate of interest while another lender is providing you a discount on the home loan. In addition, you can enjoy several advantages such as extended repayment tenure, lower processing fees and improved services. A lower interest rate will eventually bring down your EMI amount.
How can a home loan balance transfer reduce the repayment amount?
A home loan transfer can reduce your repayment amount considerably as the new lender would offer the loan at a lower rate of interest. So, you would save a considerable amount by paying lesser interests. In addition, if they agree to extend the tenure of repayment, the EMI amount to be paid each month would be reduced. While you might eventually end up paying more in the case of a longer repayment term, it would ease financial burden in the short term as you wouldn’t have to worry about hefty EMIs.
Before finalising a balance transfer option for your home loan you should consider all associated factors like interest rate, repayment schedule and other fees. You should only choose the balance transfer if the offer comes at a friendly terms and conditions compared to your existing loan.