When To Do A Home Loan Balance Transfer

  Author: Naveen Kumar

Banks and other financial institutions keep sending you mails and make phone calls about lower home loan rates for your home loan. Who doesn’t want a lower home loan EMI? But the question is should you refinance your home loan or, as people would term it do a balance transfer of your home loan? Here are the three major situations when you should do it.

You are paying a high home loan interest rate If you feel that you are paying a high home loan interest rate, you would do well to do some market research. For instance, you could take the help of a home loan calculator in an established website and find out about the current home loan interest rates and EMIs, especially from other home loan providers.

Cheaper alternatives are available If you are being charged a high interest rate while other lenders are offering home loan at much lower rates, you should consider refinancing your home loan with a balance transfer. However, ensure that the home loan provider will provide a home loan for your property.

When your loan enters floating rate period Hybrid home loans have a fixed interest rate for the initial years, followed by a floating rate for the remaining period. If it’s not more than two to five years away, wait out this period and refinance your loan. This will save you any prepayment penalty involved with the fixed rate period.

After your loan enters the floating rate period, compare the interest rate being offered by other home loan providers. If there is a difference of 1 percentage point or more, refinance your home loan with a balance transfer.

Home loan repayment is typically one of the biggest financial obligations people have. It always makes sense to be on the lookout for opportunities to reduce this financial burden. It is in this backdrop that spotting and tapping balance transfer opportunities are so very important.