Taking a Home Loan comes along with a certain amount of risk attached to it. It is always necessary to make sure that you pay your interest on time and clear your debt with your bank before the loan period expires.
Trouble Paying High Rates of Interest?
However, sometimes it can be difficult to do so. High rates of interest can cause major problems for loaners when it comes to effectively clearing their debts. If you are facing the same situation with your bank, you have the ability to opt for a Home Loan transfer.
Opt for a Home Loan Transfer
Home Loan transfer is a process which involves transferring your unpaid loan balance to another bank. It is important to know if transferring your Home Loan will actually create feasibility for you. There are a lot of factors which affect the interest rates that banks charge.
Things to keep in Mind While Opting for a Home Loan Transfer
Fluctuating Interest Rates
Always make sure that you thoroughly research the different interest rates that banks are charging. Only opt to transfer your Home Loan to another bank if they are offering a lower rate of interest as compared to your current bank.
Clashing Rates of Interests on Home Loans
Banks often have Home Loan rates that clash against each other. Also, the loans are issued by most banks follow different schemes. So, it is important to know what scheme you are investing in. Make sure that it is similar to the scheme you were following with your previous bank.
Reasons for Home Loan Transfer
Before you actually consider transferring your loan balance to another bank, it is necessary to ensure that you have a valid enough reason for doing so.
If you are finding trouble paying your loan off at the rate of interest that your bank is currently charging you, it would be a good idea to consider transferring your loan amount through the balance transfer process. This process initiates the transfer of your unpaid loan amount from your existing bank to the new bank that you have chosen. This way, you can choose a plan which charges you a lower rate of interest as compared to your previous bank.
Your bank might charge you a certain amount of transfer charges for choosing to move your loan account to another institution. Only consider moving your loan balance to another bank if you are still at the beginning of your tenure.
The Right Time to Opt for a Balance Transfer
Moving your balance at the end of your tenure is an unwise idea as you might end up paying additional transfer fees over your remaining loan balance and end up creating a bigger debt for yourself. Hence, it is advisable to tally your monetary accounts and find out for yourself if transferring your loan balance will actually be profitable to you in some way.
Applying for a loan transfer is always a better idea when you are at the beginning of your tenure and you haven’t paid the majority of your loan. This is because you have a better chance of being able to find other banks offering you lower interest rates under a similar scheme as yours.
Apply for a Top-up Loan
If the transfer charges on your loan are working out against you, there is another alternative to transferring your loan balance. Alternatively, you could apply for a Top Up loan with your lender.
A top-up loan is a small loan which your bank can offer you on your existing unpaid loan.
The permissible top-up loan amount is 70-75% of the present market value of the property, minus the outstanding Home Loan amount. This is a more efficient and time-saving way to find a solution to your loan troubles.