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Know everything about home loan balance transfer

by BankingTricks Desk
Home Loan Balance Transfer

Home Loan Balance Transfer helps you reduce your EMIs by moving your remarkable loan from other money related institutes to the one which offers lower interest rate.

Home Loan Balance Transfer or Refinancing or just Balance Transfer is the process that permits you to benefit from the lower interest rate offered by the other lender. In the event that you have an existing extraordinary home loan with one borrower, you can make a home loan transfer, that is, move the remainder add up to a different borrower who charges a lower rate of interest, the process is termed as a home loan balance transfer or refinancing. This unique home loan transfer service helps a customer evade high applicable interest rates as listed by one home loan lender and migrate to a lower interest rate structure with another lender.

So why one would need a balance transfer?

A home loan involves a fundamentally large measure of money and therefore, the interest rate on the loan involves concern for everyone who decides to take a home loan. Home loan interest rates may range from 8.0 % to 12 % and one of the most widely recognized approaches to reduce interest rates is to either converse with the bank that has provided you the loan to reduce it or go for a transfer of the balance on existing home loan or in layman terms, move your home loan to a bank offering lesser rate.

Key Features of Home Loan Balance Transfer

  1. Transfer the remarkable balance of you existing home loan to another bank or from one lender to another.
  2. There is a fee generally equal to 1% of the loan transferred that is payable to the new lender for home loan by the borrower.
  3. In most cases, the home loan balance transfer application is treated like a new home loan application.
  4. The balance transfer on an existing home loan must be availed after a pre-determined time period as mentioned on the first loan agreement.
  5. When the transfer is completed, the borrower owes the transferred chief loan sum in addition to applicable charges to the new lender instead of the first one.

Reason to apply for a Home Loan Balance Transfer:

The most significant benefit of profiting a home loan balance transfer is setting aside cash. The difference in interest rates between the two lenders, the tenure of the loan and the sum exceptional are the three essential contributing variables. In the event that you see a noteworthy benefit in the home loan interest rate, it likely could merit considering a change to the new home loan lender. You should above all else identify the objective for benefiting of a balance transfer of your loan. Then you should simply ensure that your new home loan helps you cut down your overall expense of procurement. The reason of exchanging the lender could include:

  1. Reducing the EMI burden every month
  2. Reducing the measure of money to be paid as the interest on the loan
  3. A person could likewise consider applying for a balance transfer essentially to profit attractive limits and benefits being offered by the other lender.

Benefits of Home Loan Balance Transfer:

Home loan is known to be a drawn out relationship with the lender and as per borrower it won’t be easy to pull back from it unless observes attached benefits.

  1. Lower Interest Rates: As hazard for the lender is negligible because of the collateral provided, it becomes easy for them to offer transfer rate at low interest rates.
  2. Least Documentation: Borrower has already submitted all the related documents to the existing lender. Therefore, it becomes easy for the new lender to rapidly verify the provided documents and making the process hassle free with least documents required.
  3. Reduced EMIs: On an average the EMIs of the extraordinary balance gets reduced by 5%, however this likewise depends on the new interest rate offered by another lender.
  4. Accessibility of Pre-payment Facility: Even however you have transferred your existing home loan from your lender to another money related establishment, you are as yet eligible to profit the feature of pre-payment of home loan. This means you can at present pre-close or foreclosure your home loan with the new lender.
  5. No Extra Charges: Besides processing fee, there is no extra or hidden charges involved in the transfer process. However, least processing fee is surely required by the new lender to process and precede your balance transfer application.
  6. No Impact on your CIBIL Score: People have this perception that applying for a balance transfer will directly affect their CIBIL score negatively. However, this isn’t true, as no lender will reach the credit bureau before loan transfer because your previous lender has already checked and verified your CIBIL score before endorsing home loan.
  7. Top-Up Loan: After getting your home loan balance transfer you are eligible for profiting a top-up loan. Upto 25% of the chief sum can be taken as a top-up loan. This loan can be taken to repay some sum, if borrower wishes.

Variables responsible for getting your home loan transferred:

  1. Age
  2. Yearly and month to month income
  3. Number of Dependents
  4. Work Experience
  5. Reserve funds and money related history

Leading providers of Home Loan Balance Transfer

  1. SBI
  2. HDFC Bank
  3. ICICI Bank
  4. Axis Bank
  5. PNB Housing Finance
  6. LIC Housing Finance
  7. Indiabulls Housing Finance
  8. DHFL (Dewan Housing Finance Limited)
  9. Yes Bank
  10. Citibank

There are several other banking and money related foundations that offer home loan balance transfer feature at competitive interest rates, for example, Central Bank of India, Kotak Mahindra Bank, HSBC Bank, Union Bank of India, Standard Chartered Bank, Bank of Maharashtra, Vijaya Bank, Canara Bank, Federal Bank, J&K Bank, Dena Bank, Syndicate Bank and numerous others.

Low interest rate is the essential fascination for some borrowers to change starting with one lender then onto the next. On the off chance that you have a longer tenure to repay your home loan, it will definitely provide considerable reserve funds on the interest outgo. Every loan offered by any banking organization is presently linked with the Marginal Cost Lending Rate (MCLR) whereas it isn’t applicable for NBFCs and lodging finance companies. Therefore, transferring home loan from banks to NBFCs and lodging finance companies could be beneficial with respect to interest rate offered.

Home Loan Balance Transfer – Eligibility Criteria

Any salaried, self-employed professional or self-employed businessperson with an extraordinary home loan that has been regularly serviced can apply for a home loan balance transfer. Despite the fact that all loan providers have different eligibility criteria, some fundamental ones are as per the following:

  1. You should be of Indian nationality and of an age 21 to 60 years. Whereas, self-employed people are eligible for the transfer up to 65 years.
  2. Your credit rating ought not fall in the approach your loan transfer application. Irrespective of your credit rating during the underlying loan application, if the rating plunges when of transfer, banks may reject your application for refinancing.
  3. You ought to either be employed by your current association for a certain number of years or your organization ought to have been operating for a time period specified by the lender. This period is generally 2 years.
  4. You ought to have some month to month repaying limit or the required least salary.
  5. Some banks may likewise require a base gross family income specified by the lender.

Documents Required Home Loan Balance Transfer

Your home loan balance transfer is treated like a fresh home loan application by the bank you are transferring the loan to. Therefore, while applying for your home loan to transfer to another bank, all the documents provided during the underlying home loan application need to be resubmitted. These documents are then revalidated and vetted by the bank or NBFC giving the loan transfer office. Documents are the most significant element while taking up a loan because they best help the bank to identify the loan borrower to make sure of their loan getting and loan repayment capabilities. The prerequisite key documents for home loan transfers are the accompanying:

  1. Passport size photographs
  2. Completely filled application structure for transfer issued by the money related institution.
  3. Latest three months’ Salary Slips showing break up of Gross compensation that is the Basic Pay, House rent and Net Salary after deductions, if any.
  4. Six months’ bank statement, reflecting pay credits updated within 15 days before the loan application.
  5. Identity Proof (Any One): Pan Card, Passport, Driving License or Voter’s ID card or employee identity card (as identity confirmation and signature evidence in case of government employees).Proof of address
  6. Proof of Age (Any One): tenth or twelfth Marks Cards, PAN Card or Voters ID Card.
  7. If you are a self-employed professional or businessperson, then instead of Points (3.) and (4.), you need to provide documents demonstrating the existence of your business (for businesspersons) and academic capabilities (for professionals) ; and budget summaries for both.
  8. Bank statements from wherein the home loan EMIs were deducted adding up to most recent a year of the account.
  9. The Loan statement copy and complete set of documents relating to the property that is currently in possession of the present home loan lender.

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