4 Mistakes You Need to Avoid While Opting for a Home Loan Balance Transfer

For those who have never heard of a home loan balance transfer, it involves a borrower transferring their outstanding loan amount from one lender to another. This transfer is opted for in search of better terms, such as a top-up loan or even a lower interest rate to make EMI payments easier.

However, while opting to transfer a home loan to a new financial institution could be a smart move, it is also possible to make mistakes while exercising this option. These mistakes can unnecessarily cause problems in the repayment of your home loan. To avoid these problems, take a look at 4 of the most common mistakes that one needs to avoid while opting for a home loan balance transfer:

Not Checking the New Lender’s Credentials

While looking for a good deal, borrowers mostly focus on the terms and conditions of the loan plan. However, it is also important to focus on the reputation of the lender before transferring your loan to them. It is always better to choose a lender that is well known for its services. Make sure to read reviews about them and their loan plans before making the decision of transferring the home loan to them.

Not Using a Home Loan Balance Transfer EMI Calculator

As a borrower, you need to make sure that the loan’s EMIs can comfortably be repaid. If you are transferring the loan to a new lender, it is important to be aware of the new loan plan’s EMIs before transferring the loan. For this, it is better to use a home loan balance transfer EMI calculator. This home loan calculator will display the home loan EMIs based on the new lender’s revised terms. You can then decide whether the loan EMIs helps your budget.

Opting for a Home Loan Balance Transfer at the End of the Current Loan’s Tenure

Transferring your home loan isn’t beneficial in each situation. For instance, if the existing loan’s tenure is almost over, it might not be possible to save a significant amount of money by transferring the loan. If most of the EMIs are left to be repaid, the revised terms of a new lender can help in lowering the EMI payments post the balance transfer. Therefore, it is advisable to avoid transferring the home loan if its repayment tenure has almost reached its end.

Not Focusing on the Additional Charges of the Balance Transfer

One common mistake that borrowers make is thinking that the home loan balance transfer interest rate is the only expense they would incur. However, financial institutions can also charge additional fees such as application fees or processing fees. Make sure to check this with the new lender before going ahead with the transfer.

After reading about these mistakes, be careful to avoid making them while going for a home loan balance transfer. This will ensure that the repayment of your loan gets easier!