A home loan is a sizable long-term liability of the borrower. Its EMIs consume a considerable amount of the borrower’s salary. Though every borrower performs thorough research and finalizes the best home loan at lower interest rates, there are still chances that lending institutions may change the interest rates due to changing economic conditions and hence RBI policies.
In such cases, the Home Loan Balance Transfer is the solution for borrowers with existing home loans. The borrower can switch the lender to get another home loan at a much cheaper rate and lower EMIs.
Now the home loan transfer facility is gaining popularity among the masses to save money. This facility is available if you have not defaulted in an EMI payment.
Benefits of the Home Loan Transfer
You can negotiate on the loan terms
You are already gaining with a lower interest rate. You can make your home loan terms easy by negotiating with the new lender, provided you have a higher CIBIL score, good repayment history, and a stable earning source.
When you require funds urgently, but you are paying EMIs for a home loan, it is hard to apply for another loan like personal loans to meet additional expenses. Personal loans are unsecured loans carrying high-interest rates that may be a burden with an existing home loan. A top-up loan is a solution in such cases that can be used for numerous purposes without any restrictions.
A top-up loan is an additional loan that a borrower can get over an existing home loan when you are in urgent need of cash. A lending institution offers this facility on easier processing terms and requires less paperwork.
How much can a borrower save with a Home Loan Transfer?
Let us take an example.
Suppose A has taken a home loan of Rs. 16 lakh for 15 years at an interest rate of 11%, and monthly EMI is approx Rs 16,000. After 5 years, A was Justify with 10 lakh to repay and decided to transfer the loan at an interest of 10% with an EMI of approx Rs.12,000. It will save approx Rs.40,000 with the transferred loan.
Before you switch the lender, it is necessary to know how much you will save in actuality. The home loan transfer also includes the processing fee levied by the new lender to provide you a home loan at a comparatively low-interest rate. However, this fee is minimal and varies from lender to lender.
If you compare the savings from transfer with many lenders, it is a hefty task to do manual calculations. Therefore, the best way to find your savings is to use the home loan balance transfer calculator. It will estimate your savings, and you can transfer the loan to the best lender.
Home Loan Balance Transfer Calculator
To calculate savings on transferring your existing home loan balance using home loan balance transfer calculator, the following are the steps:
- Choose the lending institution of existing home loan
- Input Your Property Location
- Enter the loan starting month and year.
- Enter the total sanctioned loan amount.
- Set the existing Loan tenor and interest rate.
- Enter the interest rate offered by the new lender.
That’s it. The home loan balance transfer calculator will compute the result within a few seconds.
Let us be more clear about the use of a home loan balance transfer calculator. Here is the calculation using calculator,
- The current lending institution is ABC.
- Property Location is Delhi.
- January 2015 is the starting period of the loan.
- The total sanctioned loan amount is Rs 20 lakh.
- The existing Loan tenor is 10 years, and the interest rate is 11%.
- Interest rate offered by the new lender is 9%.
Here is the result in just one click:
|The total amount saved with loan transfer||Rs.6,35,760|
|Top up loan eligibility||Rs.4,60,000|
|New loan eligible amount||Rs.24,60,000|
The sooner you transfer the loan, the more you can save more on interest outgo. Your property location may affect the interest rates.