Home Banking Is transferring that home loan or Balance Transfer really worth it?

Is transferring that home loan or Balance Transfer really worth it?

12 min read
Home Loan Balance Transfer

A Complete guide on Home Loan Balance Transfer

Let me give you an example of one of my friend who is working at the multi-national company in Gurgaon and he opted for Home Loan Balance Transfer his name was tiwari he has taken home loan of Rs 20 lakh from HDFC Ltd in July 2010 to buy a home in Faridabad, Haryana. This floating rate debt and applicable interest rate for 2010-11 is 9% per annum. For 2011-12 it was 11.75 percent annually. From 2011 to December 2015, the interest rate is between 11.75% and 9.95%. During this period, he twice approached the lender to reduce the rate applicable on his home loan i.e home loan balance transfer and top up, as per the current market rates. “This benefit has come to me and my home loan rate for 2015-16 is 9.95 percent,” Tiwari said.

To know the interest rates of BT refer – home loan balance transfer calculator

“Then a colleague told me about a limited time offer of SBI (State Bank of India), which offered home loan balance transfer to sbi 9.55% annually when transferred, while processing fee was very low,” Tiwari said. He did the mathematics and transferred the balance sheet from HDFC to SBI. Rs 5,600 for SBI and Rs 1,600 for other fees (Rs 6,800). The new tenure is once again 20 years old. “Even though I have been spending some money on my debt, my EMI (integrated monthly installment) has been reduced to Rs 530 per month,” he said. So, he only recovered in a year’s cost. Tiwari got an additional loan of Rs.3.5 lakh. In November, the stamp duty and registration fee had to be paid. It was also transferred.

When he transferred this loan, HDFC (home loan transfer to hdfc) had a counteroffer to the TV, an annual rate of 9.6%. But Tiwari wanted. “I showed a lot of interest in transferring the loan to the National Bank, and I think I would already transfer the interest rate reduction to borrowers,” Tiwari said.

Many borrowers transfer their loans. Any loan can be an auto loan, personal loan, educational loan or housing loan, transferred from one lender to another. But the typically transferred loan type is a home loan, as the amount is big and the repayment period is. Also, a slight reduction in rates means substantial savings in the long run. For example, if you have a loan of 50 lakh rupees, you will have an EMI of Rs 48,750 if you take a yearly income from 20 years to 20 years 10.15%. The rest of the bank, the remaining 18 years, will be reduced to Rs 48.29 lakh for the remaining eight, and another EMI will be reduced to Rs 47,050 for another year. It means that Rs .3.67 lakhs will be saved during that period.

Banks and financial institutions offer schemes to transfer the best balance at low interest or EMI. But the interest rate and the variables to be higher than EMI.

Why Balance Transfer?

An HDFC spokesperson said in an email response that “The main reasons for switching to customers are relatively high-interest rates and poor credit services from existing lender”. When the Reserve Bank of India revises rates, creditors should do so. But that did not happen. If they make cut rates, the discount may not be the same as that of the RBI. For example, in 2015, the repo rate is reduced by 125 basis points, but the lender reduction is a maximum of 65 basis points. One hundred percent is one percent. Also, new customers will have lower rates. “Some lenders will exchange the interest rate at a lower rate but the exchange rate is high, which also serves as a trigger for transfer,” an HDFC official spokesperson said.

Must Refer – What is balance transfer

Should You Transfer?

The most important factor is how much the borrower will save at a lower rate. If your savings is higher than the transfer price, the switch might make sense. Find out how much money you can pay and how much time you will save, remember that the cost of the transaction will be immediately paid, but it will spread in savings years, so you need to pay Rs 25,000 to save Rs 50,000 for 15 years.

Usually, the cost-benefit analysis depends on four parts – the difference in the best loan amount, tenure, transfer cost and the applicable rate. “If the unprecedented amount is low or if only a few years can be repeated, the balance transfer may not be ideal, as the costs of the expenses are wiped out,” said the HDFC spokesman. Payment of the current lender’s payment or not.

Must Refer:

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