The economic turmoil that India went through last year left a noticeable impact on every credit segment with rising delinquency rates. Home loans have not been an exception as well. Nonetheless, the affordable interest rates helped to intend borrowers to opt for a home loan without stressing over the repayment.
On the other hand, existing borrowers can use housing loan balance transfers to opt for a more competitive interest rate. In this regard, they can use a home loan balance transfer calculator to find installments beforehand and plan accordingly.
How to Calculate EMIs Using a Home Loan Balance Transfer Calculator?
Here is a step-by-step guide on how to use a loan balance transfer calculator to find EMIs –
Step 1: Visit the website of a reputed lender and open a housing loan balance transfer
Step 2: Enter the details of your credit with the current lender (loan amount, tenor, interest rate)
Step 3: Now enter the particulars of your new loan
Step 4: Find information like current and proposed EMIs, total savings due to loan transfer, and access to a loan amortization schedule
Besides being aware of the steps of using a home loan balance transfer calculator, you should also learn how this process works.
Steps of Housing Loan Balance Transfer
Before initiating this process, it is ideal to do a cost-benefit analysis to check whether this process is feasible for you or not. If it does, then you can follow the steps below:
Step 1: Get in touch with your current lender, and send an official letter mentioning your desire to shift your home loan.
Step 2: Following the acceptance of your request, the existing lender will issue a NOC and statement of the outstanding balance.
Step 3: You need to then submit these documents to your new home loan provider. And if everything is in order, the financial institution will accept your application and move forward with the remaining process.
Step 4: Following verification and approval, your new lender will settle the dues with your current financier. After that, your existing lender will hand over the property-related documents.
Step 5: Upon completing the whole process, you can start servicing your home loan with this new lender.
Note that you need to go through a detailed loan transfer process, the same as when you applied for a new loan. It means there will be verifications, and you need to bear certain additional charges as well.
Nonetheless, before moving ahead with the process of reducing your EMIs with a home loan balance transfer, individuals need to reconsider a few things to make an informed decision.
4 Things to Consider During The Home Loan Balance Transfer
Here are some pointers to keep in mind while transferring the outstanding home loan to a new lender:
1. Rate of Interest
The primary reason to opt for a balance transfer is to avail of a lower interest. Therefore, before applying for this process, it is vital to compare different rates. Moreover, a borrower needs to negotiate to strike a better deal.
2. Associated Costs
A balance transfer requires individuals to foreclose the loan with the current lender and start a new loan with another financial institution. Doing so involves different charges, which borrowers need to calculate before applying for a loan transfer. If the accumulated value of these charges is higher or at par with what they are saving on a home loan transfer, it will not be feasible for borrowers.
3. Longer Repayment Tenure
Opting for this facility is ideal if one can negotiate a longer repayment tenure. Paired with a low-interest rate, it will significantly reduce the home loan installment and lower the applicant’s repayment burden.
4. Top-up Loan
One of the major reasons to opt for a loan balance transfer includes the availability of a top-up home loan. Since it has no restriction on the usage of funds, one can use it for an array of purposes.
Moreover, this additional credit comes with a comparatively low-interest rate and longer tenure. Therefore, it is an ideal financing option to meet any monetary emergencies.
Besides these, one should also look out for pre-approved offers. Leading financial institutions extend such offers to their existing customers to make the loan application process hassle-free. They are available on various financial products like home loans, loans against property, and like. Borrowers can check their pre-approved offers by submitting their contact details.
Using a home loan balance transfer calculator allows individuals to find their new repayment details and check if it will be worth the hassle or not.