5 Things To Consider Before Switching Home Loan
Home loans are typically a long term financial commitment that can extend up to 20 years. During this tenure, individuals may find that another lender offer loans at more favorable interest rates. In that case, they can opt for a home loan balance transfer.
However, before going ahead with the process, individuals need to consider a few things to make an informed decision.
5 things to consider during the home loan balance transfer
Here are some pointers to keep in mind while transferring a home loan –
- Rate of interest
The primary reason to opt for a home loan balance transfer is to avail a lower interest. Therefore, before applying for this process, it is vital to review the rate of interest on offer. 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 paying different charges, which borrowers need to calculate before applying for a loan transfer. If the accumulated charges are higher or at par with what they are saving on home loan transfer, then 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 housing loan instalment and lower the applicant’s repayment burden.
4. Gathering information about lenders
Before applying for a balance transfer, it is imperative to gather as much information as possible about a lender. It will help you comprehend the market reputation of that particular financial institution and make a knowledgeable decision.
5. Top up loan
One of the major reasons to opt for a loan balance transfer includes the availability of a top up loan. It is an unsecured loan that is available on the current 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.
Apart from these, before opting for a home loan balance transfer on need read through the terms and conditions of a loan. It will help you to make an informed decision.