Transfer Of Home Loan

Home Loan Balance Transfer facility allows existing home loan borrowers to transfer the outstanding loan amount of their existing home loan to a new lender at lower interest rate and/or for longer tenures. The lower interest rate availed through home loan balance transfer facility helps such borrowers to reduce their overall interest cost. This facility is especially beneficial for those who took housing loans at higher interest rates and now are eligible for much lower rates due to improved credit profile.

The balance transfer rates offered to existing home loan borrowers would largely depend on the lenders’ assessment of the various aspects of their applicants’ credit profile, such as their credit scores, age, repayment capacity, occupation, employer profile, etc. Balance transfer interest rates are usually the same as the regular

Lower Interest Rate: Many existing home loan borrowers might have availed home loans at higher interest rates due to their lower loan eligibility and poorer credit profile. But improvements in their credit profiles over the years can make them eligible for availing home loan at low interest rates.

Maximum Tenure :Many lenders allow balance transfer customers to opt for loan tenures longer than the residual tenure of their original home loan. Opting for extended loan tenure would result in lower EMIs and thereby, reduce their EMI burden. However, opting for this option would increase their overall interest costs.

Top-up Loan : Home loan borrowers opting for balance transfer also get a provision of top-up loan along with home loan balance transfer. The top up loan amount can be used for meeting any personal, professional and requirements without any end-usage restriction. The top up loan amount may vary from one lender to another depending on the overall loan amount eligibility of the balance transfer applicant. Thus, existing home loan borrowers unable to avail top-up home loans from their existing lenders or are being charged higher interest rates for it can opt for home loan balance transfer.

Additional Benefits: Depending on your new lender, you may get to enjoy better loan features such as EMI waivers, zero processing fees, etc.

Besides interest rate, there are various other costs involved in transferring a home loan. Two of the important charges that home loan borrowers must look into before going for home loan balance transfer are as below:

Foreclosure Charges: These charges are paid to the existing lender for closing the loan before completion of your loan tenure. These charges are nil on floating rate home loans. However, for fixed rate home loans, these charges may go up to 4% of the principal outstanding.

Processing Fees:These charges must be paid to the new lender for the processing of your new home loan application (on transfer) and may range up to 6% of the loan amount.

• Your property must be ready to occupy or already occupied.
• You must complete at least 12 home loan EMIs with the current lender.
• There should not be any outstanding dues on your existing loan.

KYC Documents : PAN card, Aadhaar Card and Proof of Residence.

Proof of Income : Salary Slips and Form 16 (for salaried), last 3 years’ ITR along with financials (for salaried, self-employed and professionals) and last 6 months’ bank statements.

Additional Documents : Latest principal outstanding letter, list of documents from existing financier and repayment track record.

Home loan balance transfer process usually involves the following steps:

Step 1: Shop around for balance transfer offers with other lenders and compare their interest rates along with their features, benefits, processing fees and other charges.

Step 2: Weigh the cost-to-benefit of the balance transfer taking into account all costs associated with the transfer. Also, before going ahead, ensure that the benefits outweigh the costs.

Step 3: Once you get a better deal, negotiate the terms with your current lender to see if they can offer you the same or better loan terms.

Step 4: Once you decide to go ahead with the transfer, get an NOC (No Objection Certificate), foreclosure letter, loan repayment record and property documents from your existing lender.

Step 5: Start the home loan application process with the new lender by submitting the application form and all other required documents.

Step 6: Get a sanction letter and sign the loan agreement with the new lender.

Step 7: Now your new lender will pay off your outstanding home loan amount (that you had to pay to the previous lender) by transferring the amount to your previous lender through cheque/ demand draft.

Step 8: Once the previous lender receives the outstanding loan amount, they will cancel all the cheques and ECS and close your home loan account.