Has home loan EMI become a burden? Lakhs of rupees can be saved by this one method

If you have also taken a loan to buy a house and now its expensive EMI is weighing heavily on your pocket, then this news is for you only. There is such a facility available in the market, knowing about which you can save lakhs of rupees in the long run. The name of this facility is ‘Home Loan Balance Transfer’.

Let us understand it in simple language.

What is home loan balance transfer?

Simply put, this is ‘shifting’ your existing home loan from one bank to another. Suppose you have taken a loan from Bank ‘A’ at an interest rate of 8.5%, but after some time, Bank ‘B’ offers you the same loan at the rate of 7.5%. In such a situation, you can transfer the remaining amount of your loan to Bank ‘B’. Its biggest advantage is that your interest rate reduces, which reduces your EMI and you save a huge amount of money to be paid as interest.

When should this decision be taken?

As soon as the thought of home loan transfer comes to your mind, do not take a decision immediately. This is beneficial only if certain conditions are met:

1. There is a big difference in interest rates: If the interest rate of the new bank is at least 0.50% to 1% lower than your existing bank, then only it is a profitable deal.
2. Long term period left for the loan: If there are still 10-15 years left for your loan to expire, then you will get a benefit of lakhs by transferring it. But if only 2-3 years are left, then do not get into the hassle of transfer, because by then you will have paid most of the interest.
3. Accounting for costs and savings: There are some expenses involved in transfer, such as processing fees of the new bank and legal fees. Do the calculations and see whether this expenditure is much more than your total savings.

How to transfer home loan? (Step-by-Step Guide)

This process is not as difficult as it seems. This may take about 15 to 20 days.

1. make comparisons: First of all, compare the interest rates, processing fees and terms and conditions of different banks.
2. Take papers from the old bank: Once you have selected a new bank, contact your existing bank. Take No Objection Certificate (NOC) and complete statement of the loan from them.
3. Apply to New Bank: Apply for loan transfer to the new bank with these documents. You will also have to provide some other documents, like PAN card, Aadhar card, income proof (salary slip or ITR) and bank statement of the last few months.
4. Verification and Approval: The new bank will check your property and documents and if everything is found correct, it will approve your loan. After this he will repay your outstanding loan amount to the old bank and your loan will be shifted to the new bank.

Two birds with one stone: Benefits of top-up loan

Another big advantage of home loan transfer is ‘top-up loan’. If you need extra money for home renovation, children’s marriage or any other purpose, you can also talk to the new bank for a top-up loan at the time of loan transfer.

last advice

Home loan balance transfer is a very smart financial decision, but it should be taken only after thorough research and calculations. Don’t just get excited by seeing advertisements for low interest rates, but also be aware of all the hidden charges. A little time and proper planning can save you from the burden of unnecessary interest.