What Is The Ideal Time For A Home Loan Transfer?

The home loan balance transfer is a facility that can save you a significant sum of money, but only if opted for wisely. Typically, this boils down to timing and planning as you’re looking to secure the lowest home loan interest rate available while negotiating for suitable loan terms. However, making large savings through a balance transfer is easier said than done and many assume that getting a lower home loan interest rate is enough. However, this is not the case.

To help you switch lenders at the right time, here are the ideal circumstances for a home loan balance transfer.

When the market conditions shift favourably

One of the best times to carry out a loan balance transfer is when the RBI announces a favourable change to the repo rate. Since many home loan interest rates are linked to this external benchmark, any change made to the repo rate will, ultimately, reflect in these rates as well. As such, if the rate drops, you’ll find that many lenders will also drop their respective home loan rates proportionately, and this is a good time to consider a balance transfer. Even a 50bps cut in the repo rate can make quite a difference to the amount you stand to save in the long term.

When another lender offers you a significantly lower interest rate

While this may seem like a no-brainer, there could be instances where only a significant drop in the applicable interest rate is profitable. It may not be difficult to find a lender offering, say, a 0.75% lower interest rate, but such a difference will save you a lot of money only if it outweighs the home loan balance transfer charges.

Both, your existing lender and new lender will charge you some fees, be it for the foreclosure, loan processing or administrative work, and these greatly reduce the amount you save. Hence, refinance your loan only when the interest rate is significantly lower. A compelling case is when you are stuck with a high-interest, fixed-rate home loan and the interest rates on floating-rate home loans are ~2% lower and tending southward.

When you’re in the early stages of the tenor

If you’re looking to get the most out of the home loan balance transfer facility, consider switching lenders early in the tenor. This is because the interest component that comprises your EMI goes on reducing as the tenor progresses. As the loan matures, the interest savings may be too small to warrant a switchover. For a clear breakup of your EMI, use a regular EMI calculator and check the amortisation schedule. This table will clearly highlight the interest and principal being repaid for each EMI.

When you need additional funding

An added upside of opting for a loan balance transfer is that lenders are likely to offer a top-up loan when you refinance your loan with them. Through this facility, you can borrow over and above your existing home loan at a nominal interest rate. You can use a home loan balance transfer calculator to view how much top-up loan you are eligible for.

The money you receive through a top-up loan can be used to meet any financial goal. So, if you need emergency cash and are looking to further leverage your home, consider this option. A key reason to do is because this loan is regularly available at better rates than other financial instruments.

Among all the features of the home loan, refinance provisions are the ones you should explore all through repayment, but especially at the start. Lenders will always have new rates to offer and transferring as early as you can work in your favour. It is important to remember that the after a certain point in the tenor, opting for a home loan balance transfer isn’t profitable. For this reason, learn about the ins and outs of carrying out a balance transfer and be ready to make the switch at a moment’s notice. To have a hassle-free experience with refinancing your loan, be sure to consider opting for the Bajaj Housing Finance Limited Home Loan.

Here, opting for the home loan balance transfer facility gives you access to a wide range of benefits and convenience-first perks. You get access to an attractive, competitive interest rate that ensures loan repayment stays optimal. To add to that, you can opt for a tenor that ranges up to 30 years. This allows you to restructure your loan as you see fit to keep repayment from becoming a burden. Another notable benefit is that you enjoy online loan management facilities. For quick and easy access to this offering, apply online today!