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Balance Transfer – Best Way to Reduce Home Loan EMIs and Tenor

Things to Keep in Mind when You opt for a Home Loan Balance Transfer

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Home Loans
In this 21st century building a home is not everybody's piece of cake but there is always a way for a will hence home loans provide you the way to own a house. Pixabay

A home loan is a long-term financial obligation that requires you to be consistent with your repayment. Your EMIs are based on the interest rate and type of home loan you’ve opted for apart from the total loan amount. You should know that while home loan interest rates change every now and then, it is your responsibility to figure out whether you’re getting the best value for your money. If you aren’t, it might be time to refinance your loan. You can do this by opting for the home loan balance transfer feature with another lender that offers a better, more suitable interest rate.

To better understand why a home loan transfer is the best at reducing home loan payments, look at its advantages below.

You can Reduce your EMIs

While you may have used a home loan EMI calculator before availing your home loan, the continuous EMI payments may start weighing down on your pocket as you age. This is especially hassling when you are aware of other lenders offering better interest rates. A balance transfer to one such lender helps you enjoy a lower interest rate that is charged on your principal amount which automatically results in lower EMIs. Not only is this easier on your pocket, it also helps you save on interest expenses significantly.

You can Reduce your Tenor

When the interest rate on your principal amount drops giving you lower or cheaper EMIs, you may be able to choose a shorter tenor. In this case, you can choose to pay EMIs of the same amount as you were paying earlier, but with a shorter tenor, or you can choose to increase your EMIs by an amount that you can afford. With a shorter tenor, you are free from debt faster and your total interest reduces.

Things to Keep in Mind when You opt for a Home Loan Balance Transfer

Tenor of your Current Home Loan

Before you think of refinancing your housing loan, consider the current stage of your repayment. Generally, it is advisable to opt for a balance transfer during the first half of your repayment simply because the interest component on your EMIs is larger than the principal component during this time. This means that transferring early, and at a better interest rate, could help you reduce your total interest.

For instance, say you have a house loan of Rs.60 lakh for 240 months at an interest rate of 11% taken in the year 2001. Say you have already paid off EMIs for the first 100 months and plan to refinance the loan in 2019, when you have 140 months left on your tenor at the new rate of 8.85%. Your total savings in this case will be Rs.10.34 lakh.

Top-up Loan Feature

When you refinance your home loan, lenders typically offer you a top up loan. This loan is in addition to your housing loan and the amount you’re offered depends on your housing loan repayment history. Some lenders have the amount capped, for instance, Bajaj Finserv offers a top-up loan up to Rs.50 lakh. This loan has no spending constraints and can be used to meet any financial goal.

Also Read- How to Find the Right Health Insurance Online

The Cost Analysis of Availing the Home Loan Balance Transfer

In an attempt to save money, always consider the cost of refinancing your home loan. While it may offer great benefits, you’re required to pay fees to both, your current lender and new lender in the process. Factor all of these costs in and gauge whether or not this switch is actually going to save you money.

Always bag opportunities that ease your financial obligation, but do so only after thorough research. When you opt for the Bajaj Finserv Home Loan Balance Transfer, not only do you stand a chance to get a more affordable deal, but you also enjoy the luxury of transparency. This means that there are no hidden charges that can stress your finances. Additionally, if you opt for a floating interest rate housing loan when carrying out a balance transfer, you enjoy zero part-prepayment and foreclosure charges. To avail of this feature and all its benefits, check your pre-approved offer to get access to an easy home loan refinancing option.

Next Story

Say Goodbye to Heavy EMIs – Opt for Flexi Hybrid Home Loan

With pre-approved offers from Bajaj Finserv on a gamut of loans including business loan, personal loan, etc., availing finance is easy and quick.

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Home Loan
Say Goodbye to Heavy EMIs - Opt for Flexi Hybrid Home Loan.
  • Flexi Hybrid Home Loan allows paying only interest as EMI
  • Principal holiday period of 4 years
  • The principal and interest after 4 years paid only on the amount utilised
  • Flexibility of flexi-interest and flexi term loan in a single loan

With the Reserve Bank of India (RBI) hiking repo rates in its bi-monthly monetary policy review by 25 bps, interest rates of several loans have already started tightening. Though aimed to control inflation, it’s anticipated that home loan borrowers will bear the brunt of the latest move by the apex bank.

Hike in repo rate would push up home loan interest rates and subsequently the EMIs. The move might be a dampener if you are a first-time home loan borrower. However, with Bajaj Finserv Flexi Hybrid Home Loan, not only do you get the requisite funds to buy your dream home but are also relieved of heavy EMIs. Read on to know more.

Home Loans
In this 21st century building a home is not everybody’s piece of cake but there is always a way for a will hence home loans provide you the way to own a house. Pixabay

Payment of only interest component as EMIs

A regular home loan, on a fixed interest rate, taken from a financial institution consists of the interest and the principal component. During the entire loan tenor, the EMI remains constant. Though the interest and the principal ratio varies during the loan tenor, the EMI remains fixed.

However, with Bajaj Finserv Flexi Hybrid Home Loan, during the initial tenor, you pay only the interest as the EMI and nothing for the principal. The principal holiday period, where you need not pay anything towards the principal, lasts up to 4 years. Only after 4 years, the EMI will constitute the principal and the interest component.

So, for instance, if the EMI of your home loan is Rs.30,000, with the interest component amounting to Rs.20,000, during the initial 4 years, you need to pay only Rs.20,000. Only after 4 years, you need to pay the principal component of the EMI. This not only reduces your EMIs but also help you better manage your finances. Also, during the interest-only period, there’s no reduction in the loan limit.

Principal and interest only on the amount utilised

Unlike a regular home loan where you need to pay interest on the entire loan amount disbursed, in case of Flexi Hybrid Home Loan, after the principal holiday period of 4 years for the balance tenor, the EMIs would consist of the principal and the interest – only on the amount utilised from your approved loan limit and not on the entire limit.

For instance, if your approved limit is Rs.25 lakh for a tenor of 15 years, and you use only Rs.20 lakh from this limit, after the principal holiday period, from fifth year onwards, you need to pay the principal and the interest only on Rs.20 lakh. This further brings down the EMI and helps in savings in the long-run.

High EMIs – No longer a hurdle

Thus, with a Bajaj Finserv Flexi Hybrid Loan, high EMIs are no longer a hurdle in purchasing your dream home. Irrespective of hike in home loan interest rate, following RBI’s move, this new and innovative home loan offering helps you buy your dream home with utmost ease.

Home Loan
You need to know we can get the loan for various purposes. Pixabay

Even if you are early into your career, where generally income levels are low, you can go on and address the crucial life goal of buying the home of your choice. The principal holiday period of 4 years not only keeps your EMIs low but also ensures you are able to take care of day-to-day expense of running a household. Apply for home loan today and enjoy the joys of owning your own home.

With pre-approved offers from Bajaj Finserv on a gamut of loans including business loan, personal loan, etc., availing finance is easy and quick. No long queues and lengthy paperwork. Just share a few basic details to know your pre-approved offer within seconds.