When you have an ongoing home loan, you do have the option of transferring it to another lender. This process is referred to as home loan transfer wherein you take the balance amount due to the current lender and transfer it to another one, making subsequent home loan payments to the lender to which you have transferred your ongoing home loan.
Now, this entire home loan transfer process comes with various powerful benefits, which we highlight in this article.
One of the biggest advantages of opting for a home loan transfer is the possibility of a lower EMI. Let’s say due to a change in circumstances – perhaps loss of a job/earning source or any other situation, say a medical emergency in the family, there is a significant financial strain on you such that current EMI payments are becoming difficult.
One option is, of course, to work things out with your current lender. But in case that does not happen for any reason, you always have the option of availing a home loan transfer, with lower EMIs.
This will put you at financial ease since the money allocated towards home loan repayment will now be lower.
Better Cash Flow
The above instance is suggestive of a financial constraint. That may actually not be the case at all times. Sometimes, you simply want to opt for a home loan transfer – and have a lower EMI, in order to have better cash flow.
This money can then be utilized in ways and means that are more comfortable for you. For instance, you might want to take a sabbatical from your work and write a book; while there is no real financial emergency or distress situation as such, opting for a home loan transfer with a lower EMI gives you more money to spend in ways suitable to your situation.
Lower Interest Rate
This is a scenario where you definitively establish that your current bank/lender is offering a higher interest rate than other options available to you. In such a scenario, you can conveniently transfer your existing home loan to an alternative lender with a lower interest rate.
This happens quite frequently and often forms the basis for a lot of home loan transfers; at the time of home loan shopping, people do not cross-check their options closely and lenders seize this opportunity by levying a high-interest rate.
Only later on do many borrowers realize their folly, eagerly hoping to latch onto a lower-interest-rate home loan.
In your case, if you are certain about the possibility of a lower-interest-rate home loan available to you, then you should definitely consider the prospect of a home loan transfer.
Opting for Different Home Loan Terms
Home loans are of various types. Commonly, we find interest on home loans to be levied at either floating or fixed rates. Each one has its own pros and cons. Now, you may have started with one and might want to switch to the other.
For example, you started off with a floating interest rate but the current market scenario is such that you are better off with a fixed interest rate as floating rates are going in an upwardly direction. If your current lender is unable/unwilling to make the switch, you always have the option of opting for a home loan transfer.
The opposite scenario can also be true wherein a floating interest rate might be more favorable as opposed to a fixed one; yet again, in case of inflexibility on the part of the lender, you could easily opt for a home loan transfer.
There could be other compelling factors to favor opting for a home loan transfer. For example, you may have a fallout with the current lender for any possible reasons. Or the lending entity might be one you simply do not want to have any association with, going forward.
In a variety of such possible scenarios, working out a home loan transfer would be just the right step to take, in order to ensure complete peace of mind.
For many compelling reasons as indicated above, a home loan transfer clearly makes a lot of sense.