Buying a house is a significant achievement, especially because real estate prices can be so expensive. Most homebuyers have to apply for home loan plans in order to afford a property purchase. Now, there are various types of home loan plans out there. You need to compare the different terms and choose a plan that suits your budget. However, it is still possible to take a home loan and look for a better plan later. But having an existing home loan does not mean that you cannot enjoy the benefits of a new plan.
You can always apply for a home loan balance transfer. This involves transferring your existing home loan debt from one lender to another. Some borrowers might wonder whether going for a transfer simply because of a lower interest rate is a good idea. To address this concern, let’s take a look at how a lower home loan balance transfer interest rate can be beneficial to a borrower:
- The EMIs of your home loan are reduced
Some borrowers are looking to refinance their home loans because they are struggling to repay the loan’s monthly instalments. Not being able to pay the loan EMIs on time can result in your credit score taking a hit. A good solution is to opt for a home loan balance transfer, as this can help in reducing the loan EMIs. With a lower interest rate, the loan’s monthly instalments can decrease by a certain amount, which can make it easier for you to pay it off.
- You can save on the overall cost of the loan
As a home loan borrower, your main goal is to minimise the cost of the loan. Before going ahead and applying for a home loan, a smart borrower would first inquire with the lender about all the additional charges that are involved in taking the loan, such as the application fees and processing fees. It is important to calculate these charges to understand the cost of the loan. However, one should realise that it is also very important to make sure they are getting a competitive interest rate for their home loan. This is because even a slight difference in home loan rates can be influential in bringing down the total interest payment towards the home loan.
- It becomes easier to manage your budget
Right now, a sizable chunk of your monthly income must be getting used for clearing up your home loan’s monthly instalments. However, it is also important to think about your savings for the future. By going for a home loan balance transfer, you can effectively pay off your home loan EMIs as well as increase your savings. If a new lender is offering a reduced housing loan interest rate, it can help in bringing down the EMIs. This will give more room for savings and ease your burden. Make sure to use a home loan balance transfer calculator to understand whether the revised home loan rate is helping in making the EMI payments easier.
Therefore, these were some of the key advantages of a lower home loan balance transfer interest rate. Apart from a low interest rate, the new lender can also help in offering a top-up loan and an improved repayment tenure!