Did You Know That A Home Loan Balance Transfer Can Reduce Your Emi?
If you are tired of paying expensive EMIs on your home loan, perhaps a home loan balance transfer is your best bet. It can introduce you to better customer service, lower interest rates and additional incentives that the new lender has to offer. Check your eligibility for a home loan balance transfer using this simple calculator. If you’re eligible, read on to know how a balance transfer can come to you aid and help you save money.
How your EMIs may reduce after a balance transfer:
EMIs stand for equated monthly instalments and are the pay you pay off a home loan. There are various influencers that contribute to a change in your EMI payments. Having knowledge of these can help your better understand whether a home loan transfer can be the right move for you. Your overall EMI payments may change as a result of various fluctuations in the interest rates, tenor and even part-prepayment of the loan.
Here are the various ways in which a home loan balance transfer can help reduce your EMI payments:
- As a result of low interest rates: Interest rates can be described as the amount paid to the lender for offering the loan service. It is added to the principal and contributes to the amount which you repay over the tenor. Interest rates are the primary reason why borrowers seek a home loan balance transfer. They are also the primary reason for a change in your EMIs. Lower interest rates would lead to lower amounts of interest being paid and thus contribute to a lower sum of EMIs to be paid.
- Change in the tenor: Tenor is the period over which you make EMI payments towards the loan. The duration of the tenor varies from lender to lender and is different for different loans. Home loans usually have the longest tenor, since they offer a substantial amount loan. Lenders also offer you a tenor suitable to you according to your financial needs. While opting for a home loan balance transfer, if you choose a longer tenor, your interest would spread across a longer duration and your EMIs will decrease. If you choose the same tenor and your new home loan interest is lower than before, your EMIs will still reduce. If you choose a shorter tenor with a low interest, your EMIs may remain the same and you would be able to pay off the loan faster.
- A difference in interest rate system: Interest rate systems are the function on which interest rates are based. There are two kind of rates, floating rates and fixed rates. Certain lenders have floating interest rates that fluctuate with market forces and some have fixed rates. If your new lender has a low interest rate that is fixed, then your EMIs would automatically reduce. Thus you would end up saving more of your income as compared to before.
- Part-prepayment of your home loan: Part-prepayment can be described as paying part of the principle before the end of the tenor. This amount is more than what you pay as your EMI, and lenders usually ask for the minimum prepayment to exceed the value of three EMIs. When you make a part-prepayment, your principal reduces and this in turn reduces your EMIs.
These are some ways in which a home loan balance transfer can help you save income spent on EMIs. If you are tired of paying high EMIs, don’t hesitate to opt for a Home Loan Balance Transfer from Bajaj Finserv, which not only offers you’re a low interest, but also flexible tenor and other features like no charge on prepayment.