What is a Balance Transfer?

A balance transfer is a process of transferring the outstanding balance of a loan from one bank to another. A loan is transferred to save interest and reduce EMIs by switching to a low rate loan as well as to avail additional top-up loans from the new bank and is generally done for high-value loans. A balance transfer can be either Home Loan Balance transfer or Mortgage Loan Balance transfer.If in the market, the floating rate of interest increases, the lender usually does not increase the installment amount but they increase the tenure of the installments. So, if you want to make up for this, you can transfer the loan from one bank to another. The process is usually hassle-free. This benefits the user with a better rate of interest and helps in saving lots of money. A person can combine all his loans such as credit card loans, loans against property or any of his personal loans into one big loan. This is done to avail benefits such as a better rate of interest and to reduce the debt burden altogether. A person can opt for this loan in a situation where Current loan is running at a high rate as compared to prevailing market rates or there is a need for additional funds.