It is very common for people to take home loans to buy houses. However, buying a house might not be the only expense they come across. It is quite possible to face situations that require bills to be taken care of. For instance, you might want to renovate the house, plan a wedding, or cover educational fees.
In such situations, paying the home loan EMIs might make it difficult to have extra funds to spare for the additional expenses. To solve this problem, two solutions that come to light are taking a top-up loan from the current lender or opting for a home loan balance transfer.
But which is the better alternative? Here are a couple of reasons why opting for the latter can be beneficial:
- Get a lower interest rate
A difference in the interest rate of a loan, even a slight one, can have a significant impact on the loan’s monthly instalments. Now, if you opt to go for a top-up from the same lender, there are high chances that the interest rate of the home loan will stay the same. However, by opting for a home loan balance transfer to a new lender, it is quite likely that apart from a top-up home loan, you would also get offered a revised interest rate on the home loan. A lower home loan balance transfer interest rate can help make remarkable savings on the total cost of the home loan.
- It is possible to negotiate for better terms
Financial institutions are always competing against each other in terms of offering better deals. When opting for a home loan balance transfer, it is quite possible that the new financial institution will offer attractive terms. This does not just involve the revised interest rate. For instance, the new lender could offer you a more suitable repayment tenure, and even a top-up loan. So, this means that you do not have to choose between a top-up loan and a loan transfer, as the new lender can offer you a top-up loan as well, along with a better interest rate and suitable tenure. Do make use of a home loan balance transfer EMI calculator to understand how the new terms benefit you.
- Enjoy an improved service
There are many instances where borrowers have complained about the customer service of their existing lender. In such cases, going for a top-up with the same lender might cause difficulties in the future if you have a doubt regarding the loan and need to communicate with the customer care team. This is where a home loan balance transfer can help. Before opting for transfer, make sure that the new lender you choose provides great customer care service.
In the end, choosing to shift from one lender to another or sticking with the existing one is totally up to you. If the decision is to go for the transfer, do check with the new lender regarding the documents required for home loan balance transfer.