Most people rely on home loans while buying houses. This is because real estate prices are very expensive, and not many can complete a property purchase by simply relying on their savings. Now, there are many financial institutions that offer home loans to homebuyers. However, do note that the home loan plans they offer can keep changing over time. To entice more customers, lenders keep coming out with new deals with attractive terms.
For a borrower who has already taken a home loan, does this mean that they lose out on better terms of a new home loan deal? Not at all. In such cases, borrowers can always opt for a home loan balance transfer. For those who are not familiar with a home loan balance transfer, it involves transferring a borrower’s outstanding loan amount from one lender to another. There could be multiple reasons for this transfer – a lower interest rate, better repayment tenure, or even a top-up loan.
Before applying for a home loan balance transfer, it is very important for borrowers to use a home loan balance transfer calculator. If this is the first time you are hearing about this calculator, take a look at how to use one before refinancing your loan:
- Home loan balance transfer interest rate
This is the interest rate that the new lender is offering. It is essential to focus on the home loan balance transfer interest rate, as it is one of the main reasons why borrowers choose to transfer their home loans. While a slight change in the interest rate might not seem like such a big difference, it can actually have quite a significant impact on the overall cost of the loan as well as the loan’s monthly instalments.
- Outstanding loan amount
This is the amount that is left to be repaid. Experts suggest that borrowers only opt for a home loan balance transfer if a majority of the loan amount is left to be repaid. This is because the transfer might not turn out to be effective if most of the loan amount is already repaid.
- Repayment tenure
In this field, the borrower needs to fill up the remaining tenure of the existing home loan. Do note that it is advisable to opt for a home loan balance transfer when most of the monthly instalments are left to be repaid.
Once the user inputs all the above-mentioned details in the home loan balance transfer calculator’s fields, it will then go on to display the revised monthly instalments based on the revised loan terms. After learning about the new EMI payments, the borrower can then decide whether it would be a good idea to go ahead with the transfer. Also, it is very important to make sure to check with the lender regarding the documents that they need to facilitate a home loan balance transfer. This will ensure that the entire process of transferring the home loan goes smoothly.