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Know All About Home Loan Balance Transfer

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Owning a house is a dream of most of the people. Just with one's saving, it may not be sufficient to foot the bill of the entire property amidst prevailing property prices. Hence most of the home buyers will secure a loan from a bank or financial institution or housing finance companies to purchase a house/property. In today's competitive world, different banks offer different interest rates on home loans to borrowers owing to many factors.

Know All About Home Loan Balance Transfer
 

So, to ease the burden of the home loan payers, most of the banks have come up with the Home Loan Balance Transfer, wherein the borrower can reduce their existing equated monthly instalments by moving out their outstanding loan amount from current bank to the other ones which offer lower interest rates.

Let's understand in detail about the Home Loan Balance Transfer in India.

What is Home Loan Balance Transfer?

What is Home Loan Balance Transfer?

Home Loan Balance Transfer is a process wherein, the borrower will transfer an existing home loan from one bank to another. This procedure is also known as refinancing. The main motto behind the transfer of home loan is to secure lower interest rates on the loan amount.

The procedure involves less documentation as compared with securing a home loan.

Suppose you have a loan with a bank the existing outstanding home loan you can transfer the loan to another bank/financial institution who offers lower rates of interest. By doing so, the customer can avoid higher interest rates as listed by the existing lender and migrate the loan outstanding amount to another lender who offers loan at a lower interest rate, saving largely on the equated monthly instalments, in long run.

Key Takeaways from Home Loan Balance Transfer
 

Key Takeaways from Home Loan Balance Transfer

  • It is the transfer of the outstanding balance of an existing home loan from one bank to another bank.
  • The home loan balance transfer is treated similar to a new home loan application.
  • The borrower is charged 1% fee of the balance loan amount transferred to the new lender.
  • The refinancing can be availed by the borrower only after completion of the pre-determined period as mentioned in the primary loan agreement.
  • Post - transfer, the borrower will owe the transferred principal amount along with interest rates (offered by the new lender) and other charges to the new lender.
Eligibility Criteria for Home Loan Balance Transfer

Eligibility Criteria for Home Loan Balance Transfer

  • Applicant should be a resident Indian.
  • The age of the applicant should be between 21 years - 60 years.
  • Applicant should have a regular source of income.
  • The applicant can be either salaried, self-employed or business person.
  • The borrower should have the repaying capacity of the loan amount with some minimum regular salary/income.
  • Some banks/financial institutions also ask for a minimum gross income of the family.
List of Required Documents for Home Loan Balance Transfer

List of Required Documents for Home Loan Balance Transfer

  • Identity Proof - Aadhaar Card, Election Voter ID Card, Passport, Driving License, NREGA Card, PAN Card.
  • Address Proof - Aadhaar Card, Passport, Voter ID Card, Driving License
  • Recent Salary Slips or Form 16
  • Income Tax Returns (ITR) for last year
  • Bank account statements for last 6 months.
  • Recent Salary Slips for the last 3 months.
  • Passport size photographs
  • Duly filled in the application form
  • Documents showing proof of business and financial statements in case of self -employed or businessperson.
  • A copy of loan statement and complete set of documents of the property which is currently in possession of the existing home loan lender.
  • Bank statement of the existing home loan which shows a deduction of EMIs for the last 12 months.
Why should one apply for Home Loan Balance Transfer?

Why should one apply for Home Loan Balance Transfer?

  • To avail lower interest rates on home loans which in turn will bring down the equated monthly instalments (EMI).
  • The overall cost of the loan will come down, helping you to save more money in the long run.
  • Brings down the amount repaid by the borrower to the lender in terms of interest on the loan.
Who can avail a Home Loan Balance Transfer?

Who can avail a Home Loan Balance Transfer?

Any borrower who has an existing home loan with one bank and has a regular payment record for atleast12 consecutive months or more can apply for a home loan balance transfer.

GoodReturns.in

Read more about: home loan loan
Story first published: Wednesday, September 9, 2020, 19:39 [IST]
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