Buying a home is a costly affair as everyone cannot pay the whole amount in one go. But once you have bought it, it is one of the major achievements in your life. To accomplish your goal of purchasing a home, you search for the best home loan deal and decide on the lending institution after thorough research.
But, after getting a loan, if you come to know that better home loan offers are available, you can switch your lending institution using the facility of a home loan balance transfer. It is one of the easiest ways to deal with the increasing home loan interest rates.
What is a Home Loan Balance Transfer?
If a borrower finds a lender with better terms and a lower home loan interest rate, they can transfer the existing home loan from the current lender to the new lender.
A home loan balance transfer is treated as a new home loan application by the new lender. But the approach is different from a new home loan because it is refinancing your existing home loan.
Benefits of a Home Loan Balance Transfer
1. Reduced interest rates
This facility is aimed at saving on the loan cost that includes lower interest rates. When RBI announces reduced interest rates in the economy, lenders also reduce interest rates but at different scales. In such situations, the home loan balance transfer is an attractive option, mainly when unsatisfied with the service.
2. Reduced EMIs
The overall benefit of transferring a home loan has to decrease the loan cost. Ideally, your Equated Monthly Instalment (EMI) should be reduced and help you repay your home loan comfortably. Timely EMIs impact your credit score positively.
3. No maximum limit
There is no maximum amount limit to transfer a loan, with most lenders offering home loan balance transfer.
4. Adjusted loan tenor
You can adjust your loan tenor with the new lender. It will also reduce your EMI burden. You need to meet the eligibility specified by the lender.
5. Negotiate the terms
If you have a high credit score and a good repayment track record, you can negotiate on the terms of a home loan balance transfer for a more suitable loan.
6. No guarantor
There is no requirement of a guarantor for a home loan balance transfer.
7. Addition top-up loan to meet financial objectives
With renowned lending institutions, you have an option to get an additional high-value top-up loan at a competitive rate that can be used without any end-use restriction.
8. Loan payer transferability
A home loan can be transferred to another person also if you are selling the property.
9. Calculate savings easily
Lenders provide a home loan transfer calculator to calculate your savings on switching your lender.
The new lender will consider your eligibility and then process your loan application. Besides credit score, legal verification of property documents is also involved in this process.
- You should have met a minimum of 12 EMIs.
- You must not have any outstanding EMI on existing home loans.
- The property should be ready to occupy or already occupied.
- Documents required:
- KYC documents
- Financial statements and proof of business continuity by self-employed borrowers.
- Salary slips/form 16 and bank account statement for salaried borrowers.
- First, get a No Objection Certificate (NOC) from your existing lender. You may need to submit a letter to your existing lender mentioning you are transferring your loan to the new lender.
- Now, get a statement for repayments and the outstanding of the loan to be submitted to the new lender.
- The new lender will transfer funds to your existing lender so that it can close your loan. In return, the old lender will transfer the original property documents to your new lender. Make sure you receive the canceled cheques from your previous lender.
- Now fill in your personal details, financial details, property details, and employment details in the application form with the new lender.
- Now you can pay the fee and upload documents to submit thehome loan balance transfer
Within 5-10 days, the loan will be transferred to your new lender.