Besides lower interest rates, home loan transfer also accompanies a range of benefits like better service, pre-approved offers and many more.
However, to leverage the optimum advantage, individuals have to consider a few things. Here are some of them.
Time of refinancing
It plays a crucial loan in determining the profitability of this facility. Generally, in the initial stages of repayment, individuals mostly service their interest liabilities. Thus, it is often wiser to opt for this facility during the first half of repayment term.
Financial experts also suggest avoiding this option after 3 years of repayment.
Negotiate Interest rates
Before switching a lender, existing borrowers should negotiate with their lenders for better home loan interest rates. Lenders often offer revised rates to those with an impressive repayment history.
Thereby, individuals can save on several charges that are applicable while availing this facility.
Additional charges
Typically, a home loan refinancing comes with several charges that borrowers are entitled to pay. For instance, borrowers need to pay processing fees, foreclosure fees, inspection fees, administration fees and others.
Thus, before approaching a new lender, borrowers have to weigh if the charges are worth the transfer. For more clarity, they can also use a home loan balance transfer calculator to estimate the cost of this facility.
Repo-rate linked loans
RLLR or Repo-rate Linked Lending Rate is determined by RBI. If the repo rate decreases, the interest rates also decrease and vice-versa. Since interest rates are subject to the market scenario, individuals may have to pay a higher interest rate than before in the event of rate hikes.
On the other hand, borrowers get immediate relief when RBI cuts repo rate, resulting in reduced EMI outgo.
Credit report
The eligibility for this facility also relies on the credit history of the borrower. Lenders generally offer loan transfer facilities only to those who have an excellent repayment history and a credit score of 750 and above.
Hence, keeping these facts in mind, individuals can make most of this home loan transfer facility and lower their home loan EMI burden.
Read Also: Increase You Home Loan Eligibility: 5 Points to consider
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