Is balance transfer a good idea for home loan?

A home loan balance transfer is indeed a lucrative option for individuals looking to lower the total interest outgo.

Refinancing is a decent option for individuals who are unable to cope with high housing loan rates. Opting for this option at the earliest is wise as interest component remains high in the initial EMIs when compared to the later instalments.

Some of the reasons to go for balance transfer are-

• This facility reduces the overall interest cost of a home loan, thereby also lowering EMIs.
• In some instances, a borrower’s credit score can improve significantly when shifting outstanding loan principals from one lending institution to another.
• Refinancing gives home loan borrowers access to additional features called top-up loans. This feature allows individuals to avail additional finance over and above the principal amount. This fund can be used to clear outstanding debts or meet up the big-scale expenses.
• Balance transfer helps a borrower to enjoy customised products and better services. One can find NBFCs that provide pre-approved offers that streamline the loan application process.

Apart from these features, home loan balance transfer also facilitates higher savings. However, it is crucial to know that refinancing mandates a borrower to go through stringent verification and legal documentation. Since there are transferring charges, opt for this process is suggested when a significant repayment tenor remains.

Otherwise, the cost of balance transfer may be more substantial when compared to any actual savings.