A home loan refinance, also known as a home loan balance transfer, is a facility that allows borrowers to transfer their outstanding loan amount from their existing lender to a new one. The balance transfer facility can prove to be a profitable deal as it can bring down the total loan cost. Below, we have enlisted 5 important reasons to choose home loan refinance while servicing a housing loan.
- Reduces the interest outgo
If your credit score has improved since the time you availed a housing loan with your existing lender, there are high chances that you may be eligible for a better interest rate. By transferring the outstanding loan amount to a new lender that offers a lower rate, you can easily save on the overall interest pay-out and bring down the total loan cost. Make sure to check the home loan balance transfer rate offered by the new lender before refinancing your loan.
- Reduces the repayment burden
A lower interest rate by a new lender will translate to lower monthly instalments. This, in turn, can help you repay the outstanding loan amount without straining your finances. However, if your financial capacity permits, you must opt for a shorter tenure with your new lender. You can save a large amount of money in the long run by closing your home loan sooner.
- Home loan balance transfer and top-up
If you require additional funds while servicing the loan, you can consider opting for a home loan balance transfer and top-up with a new lender. When you opt for a loan balance transfer and take a top-up loan, you can negotiate for better loan terms with your new lender. Besides, the new lender is more likely to offer you a competitive interest rate on the top-up loan. The funds availed through a top-up loan can be utilized to meet various personal and business expenses.
- Better customer service
If you are unhappy with the customer service provided by your existing lender, you can refinance your home loan to a new lender that has an efficient and reliable customer support department. You can go through the online customer reviews of the new lender to have a better understanding of its authenticity and credibility.
- Preapproved offers
Nowadays, many lenders come up with lucrative schemes and discounts to attract borrowers from time to time. You must make use of the right window to transfer your loan.
To sum it up, a home loan balance transfer can be of great help provided you make a well-informed decision of switching your lender at the right time. It’s always advisable to opt for the balance transfer facility during the initial stages of repayment. If you are already approaching the end of the loan term, opting for a balance transfer wouldn’t be a wise choice. This is because the fees and charges associated with loan refinancing can offset the amount saved through the interest payout. To get an idea of the amount you would save by refinancing your loan, you can make use of a home loan balance transfer calculator. So, apply for home loan today. And, in case you are already servicing a housing loan, you can opt for a loan balance transfer after you go through the above-mentioned aspects to take a well-informed decision.