A home loan balance transfer is extremely fruitful for people who are subscribed to high-interest rate home loans. However, the facility has its own set of pros and cons and thus, individuals should opt for home loan transfer only after comparing the circumstances and profits they would make by switching their lender.
For starters, you can evaluate the conduciveness of your decision based on the three factors mentioned below.
Calculate the Cost of Transfer
Transferring your home loan is almost like taking a new one. You’ll have to pay the processing fee, and all the other applicable charges at the time of filing the balance transfer application. Hence, calculating the cost of transfer would give you a clear insight on whether the decision is profitable or not.
The Timing of Transfer
The timing of transfer plays a monumental role in determining the profitability of home loan balance transfer. For instance, if you switch your loan balance after 4 or 5 years when most of the interest is already recovered by your existing lender, doing balance transfer is pointless. It will only add to your burden rather than reducing it. On the other hand, if you apply for the said facility in the first few months of taking a home loan, the payable interest is still due and hence, you can actually save some money by transferring your balance to the new lender.
Are You Really Saving a Considerable Amount?
Last but not least, it is very important for you to evaluate your decision and find out if you are actually saving some money by getting your home refinanced? The best way to find the answer is by adding up the money you’ll have to pay to your new lender (includes the payable interest + processing fee + documentation charges + maintenance fees + Prepayment and foreclosure charges if any) and then calculate how much you are saving.
Well, remember the above-mentioned things to look into before transferring your home loan and get benefited in all possible manners.