A transfer of home loan balances is effective when done at the right time. This balance transfer process involves shifting a principal loan amount from one lending institution to another, the new lender offering comparatively lower interest rates.
Primarily, with a home loan balance transfer a borrower opts for the availability of lower interest rates and streamlined terms that helps in reducing EMIs. However, before choosing this facility, it is quintessential to understand the factors that affect home loan balance transfer.
What are the factors affecting home loan balance transfer?
Change in monetary policy
In India, any changes in the monetary policy made by the Reserve Bank of India (RBI) affect lending rates, which directly impact the borrowing amount and EMIs. Therefore, whenever lower interest rates are being offered due to the revision of the repo rate by the RBI, transfer of home loan balances is ideal to choose.
Optimum financial benefits
For any individual opting for home loan balance transfer, considering the maximum financial advantages is a pivotal factor that drives this facility. Generally, an ideal time to opt for this facility is during the initial years of availing a loan and not at the end of a tenor when an individual has already paid the maximum amount of interest.
Easy costs and terms
Sometimes this stringent policy, penalties and pre-payment charges imposed by lending firms instigate borrowers to choose balance transfer. As these terms and conditions vary across lending institutions, it is ideal to check and reviewing policies before applying.
The transfer of home loan balances must be made once conducting a thorough cost-benefit analysis to comprehend the savings.
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