Top 3 Reasons to Avoid Changing Mortgage Lenders - SmartAsset

Today, most homebuyers tend to rely on home loans to arrange for the required funds. Financial institutions offer various home loan plans for borrowers to choose from. They even keep updating the terms of these plans. This means that if a borrower had taken a home loan a few years back, it is quite likely that they would find current loan plans to have different terms. 

Now, if you find new home loan plans that have much better terms as compared to your current home loan, do not worry! Borrowers always have the option of going for a home loan balance transfer. For those who are not familiar with a home loan balance transfer, it involves transferring one’s home loan from one lender to another for better terms. 

If you are interested to learn more about this, go through the following benefits that borrowers can enjoy by transferring their home loans:

  1. The new lender can offer a lower home loan balance transfer interest rate 

Most borrowers choosing to transfer their home loans to different lenders are doing so because of a lower home loan balance transfer interest rate. While a slight difference in the interest rate might not seem like much, it can actually have quite the impact on the loan’s EMI payments. It can also go a long way in bringing down the overall cost of the loan. You can make use of a home loan transfer calculator to find out how the revised interest rate affects your EMI payments. 

  1. The new plan can include a better repayment tenure 

Some borrowers struggle with paying off their home loans because of unsuitable repayment tenures. In such cases, a home loan balance transfer can help in solving the problem. While refinancing their home loans, it is possible for borrowers to get better repayment tenures offered by the new financial institution. Now, getting a more flexible repayment tenure could help in paying off the home loan’s monthly instalments easily. 

  1. Borrowers can even apply for a top-up loan

A lot of people are not aware of the fact that a home loan balance transfer is not just about getting a lower interest rate or a more suitable repayment tenure. Borrowers refinancing their home loans can even apply for a top-up loan. This top-up loan can be used to take care of any personal expenses, thus proving to be a great deal for borrowers who need a better repayment plan along with additional financial support. 

These are the key benefits of going for a home loan balance transfer. It is advisable for borrowers to first make use of a home loan balance transfer calculator before refinancing their home loans. This is because a home loan refinance calculator helps the borrower understand the revised home loan EMIs based on the new terms. This makes it easier to decide whether transferring the loan would be a good move.