I Transferred My Mortgage Balance to Cut my EMIs in Half – Here’s My Story

My Home Loan Balance Transfer Story

Transferring my mortgage balance proved to be a financial game-changer for me. I recently made the move to transfer my mortgage balance, and the impact on my monthly savings has been nothing short of incredible.

In this tale of financial empowerment, I share the story of how a strategic move in the world of home loans not only lightened the burden on my pocket but also paved the way for newfound financial freedom. It is exciting to share my personal experience with something that not many people talk about – mortgage balance transfer.

What is Balance Transfer all about?

A mortgage balance transfer is essentially the process of moving your outstanding mortgage amount from one bank to another, all in the pursuit of better interest rates and improved features. In 2022, home loans made up about 11.7% of India’s GDP, and it’s expected that this share will rise to 13% by 2025. Surprisingly, not many people are aware of this financial maneuver. I am glad I chose for a balance transfer!

Like if your income has been a bit lower of your present income, you can choose to reconsider the amount of EMI that you can pay. By using online standard home loan balance transfer calculator, you can get access to all the yearly installment details. This is where the beauty of balance transfer comes to save us. It allows you to recheck your debt, make some necessary adjustments, and customize it to your current financial situation.

Why You Should Seriously Consider Balance Transfer?

Let’s dive into some real numbers to illustrate the magic of mortgage balance transfer. Imagine you have a home loan of ?20 lakh (just like me) at an interest rate of 14% for 15 years. Your monthly EMIs are a hefty ?26,635, and the total interest over the loan tenure would be a whopping ?27,94,269. Now, let’s say you decide to explore a home loan balance transfer interest rate after just one year, and you manage to snag a reduced interest rate of 12%. 

Here’s where the real savings kick in. The outstanding principal after one year is ?19,57,738, and by going for a balance transfer, you can potentially slash your total interest payable to ? 25,16,914- A jaw-dropping saving of over ?2 lakh. There can be some home loan balance transfer charges which should not be overlooked. Not to mention, your monthly EMIs become a lot more manageable at ? 24,108.

Read more about –  Is a home loan balance transfer a good idea for me?

What is The Process of Home Loan Balance Transfer?

Now, you might be wondering, how do you go about this home loan balance transfer process ? It’s surprisingly straightforward. First and foremost, shop around. Give different banks a call, inquire about their home loan balance transfer offers, and pay close attention to the interest rates and any processing fees involved.

Next, you will have to submit some documentation. For salaried individuals, banks usually ask for:

  • 3 months’ salary slips,
  • 3 months bank statements,
  • identity proof,
  • PAN card,
  • Address proof,
  • Few copies of photographs,
  • Any other relevant KYC documents.

Self-employed individuals may need additional documents like TAN card and business financial statements.

Every bank performing a balance transfer will conduct its creditworthiness assessment, so a good credit score and a clean repayment track record are essential. If you’ve been diligent with your payments, you’re likely to get the green light for the balance transfer.

My Home Loan Balance Transfer Story

To save you all from the claws of these burdensome high-interest rates, I want to share my experience with you about my home loan journey. I had borrowed ?3,00,000 for 5 years with a hefty 19% interest rate. The monthly installment, you know, the EMI, was ?7,781, and the total interest I had to pay over those 5 years was a whopping ?1,66,831. Ouch!

Fast forward just one year, and I decided to check out this thing called a balance transfer. Luckily, I found a new interest rate, a cool 14%. By transferring the remaining amount I owed, my new monthly EMIs became a more manageable ?7,112, and the total interest I had to shell out dropped to ?81,119. That’s a pretty nice chunk of savings compared to sticking with the original loan. You can probably do a lot of things with the saved money. 

Also, read how to use Home Loan EMI Calculator for Rs. 30 Lakhs

Now, let’s jump ahead to the exciting moment of paying off my mortgage. The lender sent me some official-sounding documents – a canceled promissory note, a loan payoff letter, a deed of reconveyance, and a certificate of satisfaction. And now, I regained my personal property. 

But the best part is having that extra money. You can do a lot of things with the saved money. The options are endless – paying off those pesky high-interest debts, boosting contributions to your retirement fund, building up an emergency fund, investing, or even sprucing up your home to increase its value.

Conclusion

To sum it up, this whole mortgage balance transfer thing changed the game for me. If you have a mortgage, think about giving a balance transfer a shot. It can gain you financial freedom.

Recall that financial decisions are subjective, and what suits me may not suit you. Consult with financial advisors, consider your options, and come to a decision that makes sense for you.

Cheers to a future full of financial empowerment! I hope my story sparks some inspiration for you to peek into your mortgage and discover the amazing possibilities that a balance transfer can bring. Here’s to your financial freedom, saving you from those mountains of payable interest!

FAQs

What happens when your mortgage gets transferred?

Imagine your mortgage loan being passed on to a different lender – they become the conductor of the payment orchestra, handling everything from escrow accounts to insurance and taxes. This move can occur immediately following the completion of your home loan agreement, or, surprisingly, it may come as a surprise years later. It’s similar to passing the baton in a relay race, except with house loans instead.

What are the benefits of a mortgage transfer?

Now, why would you want to use your mortgage to transfer? There is, however, a benefit to this procedure. Transferring your mortgage can be your financial superhero cape.
Picture this: the new borrower doesn’t have to navigate the maze of applying for a new loan, shelling out cash for closing costs, or worrying about getting entangled in higher interest rates. It’s like a streamlined process that simplifies life on the financial front.

How is the monthly mortgage payment calculated?

Let’s dive into the numbers game of your monthly mortgage payment – no magic spells involved. Here’s the easy calculation if your loan amount is, say, Rs. 100,000. Multiply that by 0.005, and ta-da! You’ve got a monthly payment of Rs. 500.
Or, if you prefer the scenic route, multiply the loan amount by the interest rate (let’s say 0.06), giving you Rs. 6,000 yearly interest. Now, divide that by 12, and voila! You’re back at your monthly payment of Rs. 500. It’s all about finding the math mojo that suits your style.

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