Taking out a loan is the most convenient solution for any individual who is dealing with a cash crunch. Every individual looks for a reliable source to acquire funds to buy a dream home and loans are certainly the alternative that comes to his or her mind. Due to over-popularized home loan schemes, people often forget about the loan tenures and insurance that they have already availed of.
Since people are quite aware of the benefits that they can embrace with home loans, many questions might come to one’s mind. In fact, the home loan balance transfer option is also available for people who want to reduce the burden of finance from their heads. The high price of residential property drags people into a situation where they have to acquire funds with home loans. Despite pledging an asset against the loan amount, you sometimes find it hard to meet the loan repayment and this is exactly where the home loan balance transfer option comes in handy.
But, wait a minute! Do you have home loan insurance? Then, what will happen to it when you opt for a home loan balance transfer?
Will Your Home Loan Insurance Get Transferred?
Generally, home loan insurance benefits the banks. The insurance companies will pay the home loan EMI in case you fail to do so. This means that you will pay the premium and the banks will get the benefits. Well, the question here is will your home loan insurance get transferred if you choose the home loan balance transfer option? The answer to this question is ‘No’. Your home loan insurance will not get transferred if you opt for a home loan balance transfer.
The reason behind this is that home loan insurance is a different legal entity and does not get transferred with your home loan. In fact, you have a choice whether or not you want home loan insurance to get transferred. However, you may have to inform the insurance company about the home loan balance transfer.
What If You Opt for Home Loan Balance Transfer?
Now, you know that your home loan insurance will not get transferred with a home loan balance transfer. However, your decision of getting your home loan balance transferred has an impact on the insurance.
Let’s have a quick look at the impact of your decision as a borrower:
• Home loan insurance is a different entity and your lender or bank does not have any relationship with the insurer.
• You can continue or discontinue the insurance policy as the decision is entirely yours.
• It also depends on your new lender whether it wants to accept your existing home loan insurance or not.
• You should close the policy with your current insurer if you want to discontinue your existing policy and you should inform your lender regarding it and get a new insurance policy.
• If you choose to continue with your existing home loan insurance policy, then it is your responsibility to inform your insurer about the home loan balance transfer to make a new bank as the beneficiary.
You have to pay your due premium of home loan insurance if you opt for a home loan balance transfer. Moreover, you have to be sure that your home loan is covered by the policy in all situations so that the insurer will pay the EMIs if you are unable to do so.
Is Home Loan Balance Transfer an Alternative for You?
There comes a time in life when things happen unexpectedly. Of course, no one wants to miss the repayments as it will have an impact on your credit score. This is why a home loan balance transfer seems to be the right choice for one, who is unable to bear the burden of high-interest rates. If you are in search of the right alternative that saves you bucks and makes loan repayments easy, then a home loan balance transfer is the most reliable choice you can make.
Many reasons are behind why one should opt for a home loan balance transfer and a reduction in the interest rates charged on home loans attracts people to get their hands on home loan balance transfer options. Not only you can save bucks on interest rates but also strengthen your chances of making timely repayment of a home loan. After all, it could affect your credit score and block the chances of borrowing in the future.
To Conclude
The most convenient and useful alternative available in the marketplace, a home loan balance transfer can bring you oodles of benefits. However, you should never opt for any alternative you find first. Make sure you always look for the best deals offered by trusted banks. You can seek assistance from a loan advisor and make the right choice on a home loan balance transfer. Moreover, the broker will help you understand why your home loan insurance will not get transferred when you opt for a home loan balance transfer and what the next step is.
