How to save money by opting for home loan balance transfer

Home loan balance transfer is the best way to save on interests. By transferring a home loan to a provider who offers you a lower rate than your existing provider you can save on your EMIs. There has been a dip in the home loan interest rates post demonetization. This happened because a huge amount of cash was deposited in bank accounts across the country. With this surplus of cash banks could afford to lower their interest rates by a significant amount, thus making it cheaper for people to avail of home loans.

Post the demonetization, Home Loan Interest Rates have gone down by as much as 50 basis points. This means that those who apply for home loans now will get much better interest rates than those who have existing home loan. If you’re one of the people who already have a home loan do not fret, you too can avail of the benefits of this dip in rates.

How? By opting for a home loan balance transfer! A home loan balance transfer can help you save a substantial amount of money if you choose a provider who is offering a much lower rate than your current provider. It also only makes sense for you to opt for a transfer if you have a long tenure left to repay your loan.

If you’re considering a home loan balance transfer in the near future, here are some essential things you should know about it.

1.  Savings is the main reason for transferring home loans. But make sure that you opt for a Home Loan Balance Transfer only if the total savings in interest payout is substantially higher than the cost incurred while transferring the loan. Usually, the new lender will charge various fees, such as conversion fee, processing fees and administrative charges during the loan transfer.

2.  Transferring your home loan to a new lender is similar to availing a fresh loan, where the new lender will have its own set of terms and conditions. You can use it to re-set your loan EMI and tenure and top up as well. Opt for a home loan transfer if your existing lender is not allowing you to reset the terms and conditions of your loan.

3.  Usually banks and NBFCs provide top up loans to existing borrowers. These are just like personal loans but their interest rates are lower than a separate personal loan. One may require a top up in case of funds required for an emergency or in case of a home loan for renovations. Transfer your loan only if your current provider is not allowing you a top or if the new provider is offering you a better rate.

NRI Home Loans – Five important things to know

NRI home loans have been made super accessible and instant so that more and more NRIs can now own homes in their country. Previously, this process was long and tedious and required a lot of visits to the bank by the person asking for a loan. That’s one of the reasons why NRIs chose not to go through the trouble of applying. But all that has changed now, and NRI home loans are easier to get than ever before.

Home loans for NRIs do come with a bunch of stringent guidelines though and if you adhere to them you can easily get home loans approved. The first thing to keep in mind when applying is, the person applying for an NRI home loan should have worked in a foreign country for over a year. In the case of a self-employed person, this requirement is extended to three years. There is an income criteria as well. The minimum income for the applicant to be eligible for an NRI Home Loan is different for different banks but on an average, one must have an income of 30,000 USD or 35,000 DHM (for people residing in the UAE).

So, if you too want to invest in your home country, here are some more important things you should know about loans for NRIs.

1.  An NRI is defined by the RBI as a person who holds a valid passport but is immigrating to another country for an undecided period of time, for employment purposes or to carry out a business. Only a person who is employed or has a business outside India is eligible for an NRI home loan.

2.  The amount that is sanctioned to you as a loan will greatly depend on your educational qualifications and overall income. Normally a loan is sanctioned for 80% to 85% but the amount sanctioned will be decided on the basis of your monthly income.

3.  The NRI Home Loan Interest Rates in India for NRI’s is normally higher than the interest rate that is offered to residents. This is due to the increase in risk factors. Normally, the difference ranges from 0.25 to 0.5%. 

4.  The documents required for an NRI home loan are largely similar to the ones required for any other loan. An NRI will additionally require his/her passport, Visa, work permit, employment proof etc.

5.  All payments towards this loan need to be done in the Indian rupee and not the currency of the NRIs current residence.