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    Home Loan Balance Transfer

    Where there are home loans, there are home loan balance transfers (also known as Refinancing or Balance Transfer). A home loan transfer helps the customer avoid high applicable interest rates as listed by one lender and migrate to a lower interest rate structure with another lender. Why pay a higher interest when cheaper options are readily available? Home loan transfer is a smart investor’s magic wand!!

    Home Loan Balance Transfer

    A home loan can become a big problem to deal with, especially if it’s a large amount of money that needs to be repaid over a long duration of time. The interest rate that is levied on a home loan is the elephant in the room. A lot of people who have taken a home loan have ended up paying a substantial amount of money as interest. Interest rates for a home loan can range anywhere between 9.8% and 12%. There are ways you can get this interest rate reduced. One way to do this is by negotiating with the bank when applying for the loan but an easier way to do this is to go for a transfer of the home loan.

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    How home loan balance transfer work

    To initiate the process of transfer, you need to submit an application to your existing lender requesting for home loan transfer. As per you request, your old lender will provide you a consent letter with the outstanding amount mentioned in it. Now, you have to provide all the documents received from your old lender to the new lender. The new lender will transfer funds to the old lender and your account with the old lender will be closed. After that, your old lender will hand over the property documents to your new lender. Home Loan Balance Transfer is the process where an individual who has taken out a loan from one bank can then transfer the remaining balance amount of the home loan to another bank that offers a lower interest rate. This is a benefit that is offered in most banks across the country.

    Reason To Pick Home Loan Balance Transfer

    The main reason why people opt for a Home Loan Balance Transfer is to reduce the amount of money that they have to pay as interest. There is a plethora of banks that are operate around India. Each bank offers home loans at different interest rates. It is up to you to do your research to ensure that you make the right decision in choosing the bank for our home loan. Listed below are some of the major reasons why many home loan borrowers opt for home loan balance transfer:

    • Reducing the EMI that you will have to pay every month
    • Reducing the amount of money that you will have to pay as interest for the loan
    • Attractive interest rate offered by other banks
    • To improve your credit score
    • You can negotiate for a shorter tenure with the bank that you have transferred the loan to, thus clearing the home loan amount sooner
    • The new bank could provide better service that would make your life easier

    Why and when must you avail the Home Loan Balance Transfer option?

    • If you are paying a higher home loan interest rate with bank
      1. when bank
      2. offers a lower interest rate.
    • When you deliberate with your bank to reduce the interest rate on your home loan, considering your fine repayment history and generally cordial relationship with the bank, and are refused such an option.
    • If you have a track record of 12- 18 months unblemished loan repayments on your current home loan.
    Home Loan Transfer

    Eligibility Criteria for Home Loan Transfer:

    When choosing to move your existing home loan to another bank, take care of the following requirements:

    • The applicant’s age must not be lesser than 21 years and not over 60 years at the time of application. The latter is 65 years for Self-Employed individuals.
    • The applicable loan amount is based on a number of factors, including, age of the applicant, current income, number of co-applicants, debt, the applicant’s retirement age, etc.
    • The applicant must have a clear history of 12-18 months worth of unbroken repayments on his/her current home loan.
    • The applicant must have a minimum work experience of 2 years, with the last 1 year spent in the current organization. For self-employed individuals, the expectation is 2 years in the same profession with the filing of the requisite ITR.
    • Additionally, some banks may require a definite gross family income and a clear credit history, minus any red flags and a minimum CIBIL score of 700 points.

    Documentation Required for Home Loan Transfer :

    Kindly carry along the following documents when you approach your prospective lender with regards to the home loan balance transfer. The success of any enterprise is in the documentation, right?

    • Fully completed Application form.
    • The applicant’s self-attested photographs.
    • Identity proof (could be any government issued ID- PAN Card, Voter’s ID etc).
    • Residential address proof.
    • Proof of Age (10th or 12th Marks Cards, PAN Card, Voter’s ID etc).
    • Official Address (Applies for self-employed, can be rent agreement, utility bills, lease etc).
    • Income Proof in terms of prior 6 months bank account statements that shows salary credit, last 6 months salary slips and Form-16 accounting for the last 3 years.
    • For Self-Employed individuals, the income proof is established by-
      1. Last 3 years ITR (self and business),
      2. Last 12 months bank account statement (self and business),
      3. Profit and Loss Account,
      4. Balance Sheets that are thoroughly audited by a certified CA,
      5. Complete Business Profile and Proof of Business Existence.
    • Bank statements amounting to last 12 months of the account from wherein the home loan EMIs were deducted.
    • A complete list of documents relating to the property, that is currently in possession of the present home loan lender. Also, the Loan statement copy.

    Home Loan Balance Transfer Process - The Do’s and Don’ts!

    The process of shifting your home loan from one lender to the next is surprisingly simple and quick. True, you are breaking off a banking relationship with your current home loan lender, however, your new lender is cutting down on the payable interest rate, and generally will be offering additional perks over the loan. Thus, the shifting makes sense. However, do take the following concerns into consideration to avoid a possible bitter taste in the mouth that results from a hasty, ill-timed or ill-planned move-

    Credibility: Ensure that the prospective lender is credible and the current slashed interest rate offering isn’t a short term promotional gimmick.

    Service Quality: In most cases, bad service negates the good graces earned by a competent product or service. Kindly certify that the new lender isn’t a big disappointment when it comes to customer support.

    Estimate Applicable Costs: Spending too much in the process of the home loan balance transfer isn’t a very good idea. Applicable costs include processing fee, stamp duty and other documentation charges. Also, ensure that you are well aware of the inherent numbers and calculations using a good home loan balance transfer calculator . Hail technology!!

    Read the Fine Print: This applies on both ends- from your current lender and the exit procedures, as well the new lender and the on-boarding process. Many delays and inconveniences can be avoided by reading through the loan documents and other associated literature, while being aware of conditions like the submission of notice to the current lender, confirming upon the new bank’s eligibility criteria etc. that could potentially cost time.

    After the above concerns have been negated, the actual home loan balance transfer process is fairly straightforward-

    • Submit a request to your current home loan lender with regards to a prospective home loan transfer.
    • In response to your request, the bank will issue a No-Objection-Certificate (NOC) and a statement mentioning the outstanding amount.
    • Submit this NOC and account statement to your new lender. The latter will raise measures that ensures the closure of your home loan account with the earlier bank.
    • After both banks are in sync, the associated property documents will be transferred from your old bank to the new bank. All pending ECS or post-dated cheques will be deemed cancelled.
    • In some cases, your current bank may levy a prepayment penalty that amounts to about 2%-5% of the outstanding amount. However, most banks have now abolished this practice and many more are following suit.
    • Voila! Your new home loan profile with the new bank comes with a brand new, and comparatively lower interest rate. Next, smile!

    Why waste or wait-out a good thing? With the sky-rocketing cost of living and the ever incrementing inflation rate, small pleasures like the home loan balance transfer are welcomed with open arms. Almost all Indian banks that specialize in home loans do offer the option to transfer existing home loan to another bank. Avail this option, save on home loan interest rates and enjoy the subtle art of financial planning.

    News About Home Loan Balance Transfer

    • Gift Vouchers Worth Almost Rs.15,000 Granted on Home Loan Transfer

      Grab your chance now!

      The most diversified financial services provider in the country, Bajaj Finserv, has made available a great offer to its customers who wish to transfer their present home loan for a lower rate of interest. Individuals who make an application for a home loan balance transfer between the 20th and 26th of March can avail a truly attractive rate of interest along with a gift voucher from Tanishq as well as a 3-EMI holiday. What’s more? The approval of the loan could be complete within five minutes. Customers can also make the most of flexi schemes, part prepayment facility, and loan top-ups. Individuals who apply for a balance transfer and the value of the loan is more than Rs.30 lakhs can win a Tanishq voucher worth Rs.30,000. For loan amounts that range from Rs.20 lakhs to Rs.29.99 lakhs can win a Tanishq voucher worth Rs.10,000.

      23rd March 2017

    • Time to change your home loan as some banks slashes rates

      Grab your chance now!

      In less than a day after RBI announced the landmark 50 bps cut in its chief policy rates during their fourth bi-monthly fiscal policy, State Bank of India has followed suit by bringing down the rate by .40 percent and the new rate currently stands at 9.30 percent. As India’s largest public sector bank, this step of SBI has set a high benchmark for other banks. Following suit, even smaller banks like Andhra Bank are reducing their rates by at least 25 bps, and the current rate is 9.75 percent as a result. This trend points to the fact that now is the ideal time to keep an eye on these rate shifts, particularly if you are planning to purchase a house with home loan or if you have a pending housing loan and switch accordingly.

      14th January 2016

    • Processing Fees Waived for Transfer of Home Loan to SBI

      The State Bank of India has offered a complete waiver of processing fees on transfer of home loans from other lenders. SBI has made this move to combat an ongoing battle for market share with top banks like HDFC and ICICI bank. In an effort to establish itself as a serious retail lender, SBI already offers the lowest home loan interest rates at 9.70% for women borrowers and 9.75% for others.

      With RBI’s ban on pre-closure penalties applicable on floating home loans, customers in India have been moving from one lender to another to get better interest rates. SBI’s home loan book had a 10% increase only due to transfers from other lenders and housing finance companies. This waiver will further strengthen the bank’s position as the preferred lender for home loans, with unbeatable interest rates.

      29th June 2015

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