When to do Balance Transfer?

balance transfer

When to do Balance Transfer?

Balance transfer

Balance transfer is the process where you can transfer your outstanding balance of the credit card or loan to other banks which offer you the low interest rates. This provides the great benefits, but sadly very few know about this service and maximum people are unable to avail this service as lack of knowledge about balance transfer.

Adopting the balance transfer in the initial stages of your repayment adds even more advantage as the benefit of low interest will be for a longer time. The people having bad credit score can save more by availing the balance transfer (BT). For Instance, you was charged 20% interest for your personal loan because of your bad credit score, when your CIBIL is improved you can get balance transfer done at 14%, because banks are open to individuals and offer balance transfer (BT) if you hold a good cibil score.

Some lenders charge foreclosure fee as percentage of the outstanding principal amount. This means if you want to close your loan before the date of tenure you will be charged for foreclosure and balance transfer may have the processing fee too. This means you will be incur extra charges of foreclosure and balance transfer processing fee. You need to calculate all the extra charges and compare if you are benefiting with the interest rate offered to you with balance transfer. Compare against the loan amount you will be paying if you continue the same loan.

Steps for Balance Transfer

These points may slightly vary depending on the Lender norms:

  • Look a foreclosure letter, property documents list and account statement from the current lender.
  • Analyze the market of Balance transfer and choose the home finance company.
  • Submit the necessary documents income,loan application, identity etc., to the new lender
  • Credit appraisal from the new lender along with field investigation and loan sanction.
  • Offer letter from the new lender.
  • Submit your legal checks and documents.
  • Sign the agreement and post dated cheques and provide it to the new lender.
  • Loan Disbursing in favour of old lender.

Points to consider Balance Transfer

  1. Take time and calculate the whole loan amount after balance transfer including the extra charges like pre-closure and processing fee. Now sum it all up and compare with the ultimate loan amount if you continue with the same lender.
  2. Make sure the interest rate offered is not a teaser rate that will contractually increased after a certain time.
  3. Ensure that your paperwork under process of new lender, especially the property ownership papers, this will delay the loan disbursal.


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