Owning a home is a lifetime achievement, a dream and a home loan is a successful key to make that dream come true. Borrowing a home loan is not only an important step in life to create a new asset that has the potential to generate good returns over time and also an influential way to save taxes. The increased availability of home loans throughout the country is one of the vital reasons why the demand for property is continuously increasing and housing loans have emerged as a life saver and one of the most popular among the available loan products in India.
As a result of this high demand of residential properties along with a wide range of other market factors, the interest rates on home loans, about 5 to 10 years back, were as high as 11.25%. But now with the changing demands, concepts and economic development things have changed in present time and the influential factors have caused the interest rates to decrease and reach the current levels considerably that are as low as 9.1%. However, this low rate of interest is a boon for both, those who are applying for home loans now and will become the new borrowers and also for the existing home loans borrowers. All one needs to do is a home loan balance transfer in order to access these benefits. As lots of Banks/ NBFC’s and other financial institutions lend money and also facilitate balance transfer, so it needs lots of awareness and research to choose the right lender. To know more about the available options internet gives an access to the best possible available options that fits your eligibility and your budget too. In case the borrower still finds it difficult to select the right lender, the experienced team of Mudra Homes will be happy to help or the borrower can directly visit www.mudrahomes.com.
Let’s calculate how much an existing borrower can save by transferring the home loan:
Let’s assume the initial loan amount was Rs. 100 lakhs in 2011
Interest rate on the initial loan = 11.0%
Loan Tenure 20 years
Monthly EMI = Rs. 103219/-
Home loan amount outstanding at the end of 2017 i.e. the start of 2018 would be Rs. 85.47 lakhs
If you initiate a home loan balance transfer on this outstanding amount and get an interest rate of 8.5% on the outstanding amount, the following is what will happen.
Amount transferred = Rs. 41.20 lakhs
Interest rate subsequent to transfer = 8.5%
Remaining loan tenure = 20 – 7 = 13 years
New monthly EMI amount = Rs. 90709
So savings generated per month subsequent to the HLBT = 103219 – 90709 = 12510Rs.
Total savings generated over the remaining loan tenure = 12510 X (12×13 months) = Rs. 19.51 lakhs
The above savings does not fall into account of any of the fees associated with the Home Loan Balance Transfer but even considering those in, the borrower can definitely save in the ballpark of Rs. 19.51 Lakhs – an amount which can fund an important part for your child’s education or help you to refurnish your house or even it could help you to finance you a new car!.
These savings are also not considered with the tax benefits associated with home loan and the interest paid which the borrower will continue to receive and that’s the icing on the cake. (To know more please refer to “Tax Benefits on Home Loans”)
As Benjamin Franklin said “Beware of little expenses; a small leak will sink a great ship”. The above article doesn’t show much savings but still “a penny saved is a penny gained”. As said above that this saving can help the borrower to avail a new loan to finance few more luxuries. So, take a step, move ahead and enjoy.