The concept of Loan balance transfer basically involves transferring the outstanding principal loan amount from one financial institution to another to get better loan interest rates. Usually banks avail loan balance transfer services for Home loan and Personal Loan Balance Transfer.
You can consider bank loan transfer for several reasons some of them we have listed below:
Loan balance transfer helps you reduce your EMIs on a cheaper interest rate by moving your outstanding loan from one financial institute to another institute with lower interest rate. Depending on the institution, you can also get enjoy features like additional top-up loans, Flexi Hybrid facility, pre-payment facility, and nil foreclosure charges. So, if you have taken the loan from Bank A while interest rates were high or you were working in a small or mid size company and now you have moved to a bigger organization to which banks offer a better interest rate. If the probability of the current bank reducing the interest rate is low, you can move your outstanding loan amount to Bank B with a minimal charge and would end up paying lower EMIs.
You can also look for a loan balance transfer if you are looking to increase or decrease your loan tenure or EMI, and your current bank is not agreeing to do so. There are many private financial institutions that can do it for you by applying minor processing fees.
Top-up loan facility provided by banks and other financial to allow you to lend a certain amount of money over and above your currently running loan. Before granting for the top-up loan facility banks check your repayment ability and past track records of repayment of the current loan. To grant the top up loan facility your credit report should be satisfactory then only banks grant the top-up loan facility by applying minor processing fee.