Home Loan Balance Transfer - Process & Tips (Hindi) - YouTube

Subscribe to the Asset Yogi channel and press the bell icon

To watch the latest finance videos above all

Music

Namaskar, my name is Mukul

And you are welcome to the Asset Yogi

Where we unlock the knowledge of finance

Assume you have taken a home loan

And its interest rate is more than the market rate

For example, the interest rate on today's date is 9.5%

And maybe you are getting an interest rate of 8.25 % in the market

So in this case you should transfer the interest rate of a home loan or not

This means whether or not you should shift the

loan to another bank at a lower interest

In what cases should you do it?

It depends.

We will understand this with calculation

In what cases you should shift

And along with that, we will see what is the process

of balance transfer?

So stay tuned with the video

So that you will understand the calculation properly

Let's go straight towards the blackboard

To understand the home loan balance transfer

We will take an example. Assume you have taken a home loan from Bank 1

And your current interest rate is 10% per annum

And we will assume that

your outstanding loan amount is 40 lakhs remaining

Assume you are getting a 9% interest rate in the market

from any other bank

So if you do a balance transfer to another

Bank 2 at 9%

Then we call it a balance transfer.

Assume you do this type of balance transfer

Then processing fees are charged in that

Generally, it is charged from

0.25% to 1%

of loan amount

So this 40 lakhs

We take the average of 0.5 % of 40 lakhs

If we calculate 0.5 %

Then it will take 20000 Rs to transfer the loan

from 10 % to 9%

Now we will see whether you will be benefitted or not

should you even give the money or not.

But before that, we will see other features of balance transfer

So if you want to do a balance transfer then you have to do the whole home loan

process again. You have to do the documentation again with bank 2

I have made a video on the home loan process

and the documentation

You can watch that video of mine. It is quite detailed.

You will understand the whole process in that. And you will understand what documentation is

required. So once you have done the whole process of home loan

and submitted the documents in bank 2. After that, you get a list of documents additionally

Bank 1 has all your mortgage papers

Whichever your original property papers are

They are kept with bank 1 so it has a list of documents

We call it LOD in short.

So you will get a list of documents

And you have to give it to bank 2 because bank 2 wants the surety

that bank 1 has all the papers or not.

After that, you have an option if you want to do a bank transfer then your original loan

the agreement may have some minimum time period.

Let's say you have to pay a minimum of 12 EMIs

Before that, you cannot transfer the loan.

So, see these types of clause

It is not at all beneficial to transfer the loan immediately after 6 months

You should wait for 1 year

Because the rates are revised after one year

The interest rates are revised after one year

Maybe your interest rate will be decreased automatically

But if your bank 1

doesn't decrease your interest automatically

Assume the interest rate in the market has decreased then you can negotiate

with bank 1 that either you decrease my interest rate

or else I have to transfer the balance and go to another bank

So in many cases, bank decreases your interest rate

And sometimes they also charge some processing fee from you

They say you will give processing fee in some other bank

It is better that you pay that fee to us

We will charge less and decrease your interest rate

So that is also not a bad option

You can go with that

But assume your bank doesn't decrease your interest rate

So if you have to do the balance transfer

Then how will you do it? For that, you will do your cost-benefit analysis

Whatever processing fees you will pay

Whether or not you'll be benefitted from that or not

You will see that.

And second, remember one thing

Your interest rate is always higher in the early stages of the loan

Interest rate means the amount you'll pay as interest initially

The interest is very high compared to the principal. Assume you have taken a loan for 20 years

If you transfer the loan in the initial 5 to 7 years

Then you will be benefited. But if you transfer the loan in the last 5 years

Then you will not benefit that much.

We will understand this by calculation

So we will do a cost-benefit analysis in our example

Assume your loan is 40 lakhs

So what will be the cost for its balance transfer?

We will see the cost first

So what will be your processing fees? Assume you have taken a

40 lakhs loan. If you have gone from 10% to 9%

Then the difference is 1%

So what is the profit here?

The profit is 1%. I will write benefit here.

So first we will see the benefit. What will be the benefit for you

That is 1%. What will be 1% of 40 lakhs?

It is 40000 Rs

So your benefit is 40000 Rs

I am calculating the benefit annually

So why am I calculating it annually?

Because the interest rate is revised every year

Maybe it will be revised in 5 to 6 months again

So it's not like you will pay a processing fee every year to decrease your loan

Whenever you see your benefit, check it annually

Many people show it like that to transfer the loan that what will your benefit for the lifetime

Don't calculate it like that. See your annual benefit.

Because maybe it will be revised automatically after a year

And you will not transfer your balance every year

And assume you have to do it every then do your cost analysis. Now we will see how much

will be the cost, processing fees. If we assume 0.5% here

If you are getting the average

You can calculate it. I am just taking it for example

So what will be 0.5% of 40 lakhs? It will be 20000 Rs

So the expense will be 20000 Rs but you are getting the annual benefit of 40000

So in this case you can transfer the balance

Now we will take another example

Assume your interest rate is gone from 10% to

9.5% only

We are assuming

So your profit is only 0.5%

So how much is your benefit? It was 20000 Rs., and how much is your cost here?

It was 20000 Rs. So, in this case, you are not benefited that much

So you don't have to bear this much hassle

You shouldn't do the balance transfer in such cases.

Assume the processing fees, in this case, is 10000 Rs

Assume you will negotiate the processing fees to 0.25%

So your benefit was 20000 Rs

So you could go with the balance transfer

So these were early stages

When your loan was quite much

Assume it is 40 lakhs Rs

Now assume your loan amount is 5 lakhs

We will assume the outstanding amount is 5 lakhs Rs

So if we consider the cost as 0.25%

or we will consider it 0.5% then also it is quite less

Every bank charges minimum processing fees

I will assume the processing fees as 10000 Rs including service tax

We will take the minimum cost of processing fees

So how much is the profit here?

I will assume it is 1%. You are benefiting for only 5000 Rs as 1%

And maybe your loan is left for only 2 or 3 years

And what will be the benefit in 2 years?

It will be 10000 Rs

We are assuming the difference will remain 1%

Then also you are not getting very much benefit so you shouldn't transfer your balance

In this way, you can do your cost-benefit analysis that what is your processing fees

And compare it with annual benefit

If you are getting benefits then you can transfer the balance

You should do it.

I have tried to cover all the major points in this video.

But then also if anything was missing or you want to add something or if you have

any other suggestions related to the video or the channel, please comment below.

And like and share the video

I try to share investment and finance related detailed videos with you

So if you haven't subscribed to the channel yet

Then subscribe

And press the bell icon

So that you will get the notification of the latest video

Let's meet in the next video

Till then keep learning keep earning and be happy