Home Loan: What is the best time for home loan transfer? Things you should keep in mind
If you want to refinance the home loan, it’s important to take note of the prevailing financial conditions and the ability to repay the new loan. Borrowers need to take a look at the balance transfer process including any hidden fees or charges before they opt for refinancing their home loan.
Home loans come with a duration of up to 30 years and offer a number of repayment tenures. Borrowers can also transfer their home loan from one bank to another lender with a more favourable rate of interest. Also known as home loan refinancing, this financial tool has several benefits. It can help them save money on their repayments and ensure that they get the best possible deal out of the scheme. But, borrowers need to keep in mind certain factors before they opt for a home loan transfer.
Take a look at what is the best time for a home loan transfer and what one should keep in mind.
Best time for home loan transfer
If a person wants to refinance an existing home loan, they should take note of the prevailing financial conditions and their own ability to deal with the new terms. Ideally, it is best to opt for home loan transfer when the market interest rate is lower than the rate on the existing home loan. This can help reduce your burden of interest payments. A change in credit score may also prove to be a good time to change your loan refinancing options. If a borrower’s credit score has gained since they took the original loan, they may become eligible for a lower interest rate. Apart from that, one needs to check if the home loan transfer offers them better deals before they select the option.
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Things to keep in mind before choosing a home loan transfer
Total charges: Borrowers need to take a look at the balance transfer process including any hidden fees, administrative charges and processing fees. If the balance transfer cost is lower than the loan interest amount cost, it will be favourable to refinance the home loan.
Work out the complete repayment process: Before individuals opt for home loan refinancing, they need to understand their repayment terms in great detail. This can help them figure out if the new scheme is actually beneficial for them. The creation of a repayment plan can help to pay the dues timely.
Work out when maximum benefits can be availed: Borrowers need to ensure that they avail a home loan transfer only if they are getting the maximum benefits. This will happen if there is a significant amount yet to be repaid. Many people opt for a home loan transfer in the early years of the loan tenure for this reason.
Lower interest rate: If the lender is willing to negotiate a lower interest rate in light of changes in Repo Rate-Linked Lending Rate (RLLR) or other factors, it is not needed to opt for a loan transfer.