What is the Difference Between a Home Loan and a Home Loan Balance Transfer?

 

Are you planning to get a home loan? You will often come across the term "housing loan balance transfer" as well. These terms are very related to each other. They are very different too. Housing loans are taken to purchase plots of land or any constructed property for personal as well as commercial use. 

However, a home loan balance transfer is done after taking a home loan. The balance transfer is usually done to ease the home loan repayment. Therefore, both these aspects are very different from each other and work completely in a separate manner. In order to gain complete insight, let us take a quick look at both of these aspects carefully.

What is a housing loan?

Housing loans are secured forms of loans taken to purchase property or plots of land. It is a high-value loan that includes a high principal loan value. This makes it an expensive form of a loan with a high rate of interest. Individuals rely on housing loans to buy any real estate project or invest in property. Housing loans are taken by both self-employed and salaried individuals. Since it is a high-value loan, the eligibility criteria for getting one are very high. Housing loans are very popular nowadays with banks and non-banking companies. If you get a low rate of interest, your house loan can be very affordable.

What is a home loan balance transfer?

A home loan balance transfer is the process of transferring the existing housing loan amount to a new loan provider. When it becomes a burden on the borrower to repay the housing loan, they often transfer the balance to get a better rate and terms and conditions. A balance transfer is done with a new loan provider to get a better rate of interest and new loan tenure. This eventually makes the monthly installment amount affordable for the home loan.

The difference between a home loan and a home loan balance transfer

The purpose of a home loan is to purchase a property or plot of land. Housing loans are mainly required by individuals to invest in real estate projects. However, the purpose of a housing loan balance transfer is to get a better rate or loan tenure to make repayment easy. A balance transfer is usually done on the existing home loan to ease the burden of monthly repayment.

Affordability: A home loan balance transfer is significantly less expensive than a new home loan. This is because when you transfer a housing loan, you always get a better home loan interest rate. This makes your home loan very affordable. However, housing loans are expensive due to the high principal loan value. It depends upon your eligibility criteria and the particular loan provider.

Eligibility criteria: A housing loan's eligibility criteria are determined by income, property type, credit score, job stability, business stability, and income. However, for home loan balance transfers, the only eligibility criteria will be a clean track record of repayment. You will be able to do a home loan balance transfer only when you have a smooth repayment track record. It will be difficult to get a new loan provider without a clean track record on existing housing loans.

Wrapping up

When you take a home loan for salaried individuals, it is important to get all the home loan documents required. Visit Clix Capital to get a home loan instantly.