Purchasing a house is often regarded as one of the most significant investments customers are likely to make. It is a first step to a steady life and raises hope to create those cherished moments. But to get that dream home a majority of us need a home loan. A home loan is a secured credit facility that can be availed from a bank or housing finance company. 

Understanding Home Loans

There are various factors to consider when taking out a home loan:

Loan amount: This is the total amount of money you get from the lender for the purpose of buying a house or home. It is often a sizable percentage of the property’s worth.

Interest rate: The interest rate is the amount charged on the borrowed sum of money. It is stated in terms of a percentage and helps to define your monthly EMI (Equated Monthly Installment). Lower interest rates bring down the amount of monthly installments and the entire cost of the loan.

Types of Home Loans

There are several home loan options available to cater to different needs:

Purchase Loan: This is perhaps the most frequently used home loan, especially for the acquisition of a new or a used house.

Refinance Loan (Home Loan Transfer): This is the process of moving your current home loan from one financial institution to another that may be offering more favourable terms.

Construction Loan: This is a loan usually taken with the intention of building a new home.

Top-up Loan: This is a loan which one can borrow on top of an existing home loan for other purposes.

Thinking about a balance transfer home loan?

Thus, if you are not satisfied with your interest rate or loan terms or both on your home loan, then finalizing a home loan transfer can definitely be for you. Here’s what to consider:

Interest rate differential: If the savings from the lower interest rates outweigh the transfer fee the only one must go for this option. 

Processing fees and other charges: Compare the processing fees, legal charges and all other costs associated with the transfer with the potential advantages.

Prepayment penalty: Some of the lenders may levy a fee if you agree to pay off your loan before the agreed time. Consider this when making this comparison.

Balance transfer limit: Some of them do not allow balance transfer for the full loan amount.

Tips For Getting A Home Loan

Improve your credit score: This makes it easier for the borrower to get better interest rates.

Look around and compare offers: This is a very important step because good offers do not always come your way. That is why you have to compare the rates, terms and fees of different lenders.

Negotiate the interest rate: Do not hesitate to discuss with the manager the possibility of getting a better interest rate, if you have a linear credit history.

Conclusion

Owning a home is one of the biggest dreams in a person’s life or at least one of the major goals. A home loan is that magic wand which can help one to achieve this dream. Thus, it is important and beneficial to know the details of home loans and home loan transfer so that an optimal option for the dream home can be availed. Just remember, it does not hurt to seek the advice of a financial advisor when it comes to home loans since these can be quite confusing and you want to make sure that you make an ideal financial decision.