The process of transferring the balance of your loan from one lender to another is known as balance Transfer. It is also applied to financing your loan. It is not only one option for customer who have been with a bank for less than two years.
Advantages of Balance Transfer :
1. You can decrease the cost of borrowing on the mortgage and save on interest costs and carrying down the cost of your home.
2. You can free up cash in case the increased value of your home.
3. You may lock yourself in a permanent rate of interest if rates are low.
Disadvantages of Balance Transfer :
1. You will regularly have to pay your bank a pre-payment fine, which can be anywhere between 2-5% of the outstanding principal at the time of pay.
2. You also pay the processing fee of your new lender, which is to be between 0.25%-1% of the amount of the loan for which you have utilized.
3. You also undergo another credit estimation which includes all documentation process with your new lender.
If you are feel that your reasons for a refinance are effective, start the process as soon as possible to escape unnecessarily paying a considerable amount of interest.