Home Loan Balance Transfer

A Home Loan balance transfer refers to the process of transferring your existing home loan to a new lender who charges a lower interest rate. The method to transfer a home loan is quick and hassle-free. However, it may vary from one financial institution to another. So, before you go for a home loan balance transfer, make sure you are aware of the right approach. Here, for your easy understanding, we have discussed its process in detail.

Key features of Home Loan balance transfer

Lower rate of interest: The primary reason why borrowers opt for a home loan balance transfer is to take the benefits of a lower rate of interest offered by another lender. Lower interest rates help them to reduce their monthly EMIs and eventually the total cost of the loan.

Fast processing: The process of a balance transfer is quick and hassle-free. Unlike any other loan application, this process also takes only 7 to 10 days for completion. To get faster approval, you can apply for it online.

Top-up: At the time of the transferring your existing home loan, you also get a facility of topping up your loan amount. You can apply for more loan amount along with the balance you are about to transfer.

When should you opt for a home loan balance transfer?

  • If the new lender is offering a better deal such as a low-interest rate and better flexibility.
  • If your income and overall financial condition has improved
  • If your credit score has improved recently and now you can avail a better deal on your existing home loan

Note: When going for a home loan balance transfer, you should always take into consideration the processing charges and balance transfer fees. If the new lender's interest rate plus these additional charges prove to be cheaper than the current loan, only then you should choose to refinance the existing home loan.

Benefits of Home Loan balance transfer

  • Reduction in the interest rate that helps you to save your money
  • Reduction in monthly EMIs payable
  • Option to avail top-up loan at a lower rate of interest
  • The overall cost of your home loan will become less

Home Loan balance transfer process

Here is a step-by-step process for home loan balance transfer:

  •  Shop around: The first step to start with your home loan balance transfer process is to compare multiple home loan offers. After making comparisons, choose the lender that offers a lower interest rate.
  • Negotiate with your existing lender: If you get a better deal, talk to your existing lender if they can negotiate the terms and conditions on your home loan.
  • Get NOC from the existing lender: Then, you need to submit a letter to your existing lender requesting a loan transfer. Your existing lender will issue a ‘No Objection Certificate’ along with the remaining loan amount.
  • Collect important documents: Ensure you take the property documents from the existing lender as you need to submit them to your new lender. 
  • Submit the documents to the new lender: Now, submit all the documents to your new lender so that they initiate the process of home loan transfer.
  • Repay and close the existing loan: Your new lender will pay off your outstanding home loan by transferring the remaining amount to your old lender.
  • Start a new home loan with better rates: Once your existing loan is paid by the new lender, you can start with a fresh home loan with the lender of your choice with a reduced interest rate.

Things you should know before transferring your home loan

Before you go for a home loan balance transfer, make sure you take note of the following things-

  • Try to convince your existing lender for lower rate of interest. This will help you save your money in the long run.
  • Check your credit rating and evaluate whether you are eligible for a balance transfer or not.
  • Always do a background check of the financial institution before finalizing your decision.
  • Do the cost and benefit analysis and check whether going for a balance transfer is profitable for you or not.
  • Read the fine prints carefully when you are choosing a new lender.

Eligibility criteria for Home Loan balance transfer

  • The eligibility criteria for transferring your home loan balance may vary from one financial institution to another. The most common criteria include:
  • The minimum and maximum age required is 21 years old and 60 years or lesser. A self-employed individual is eligible for the transfer up to 65 years.
  • The applicant must have a running home loan from another lender.
  • Applicants should have paid at least 6 to 12 EMIs on their existing home loan before opting for a balance transfer.
  • There should be no default in payment of EMI on existing loans.
  • You must have a monthly repaying capacity to repay your loan on time.
  • Make sure you must have a good credit score of 750 and above.

Documents required for Home Loan balance transfer

You need to submit a below set of required documents for completing your home loan balance transfer.

  • Latest passport-size photographs
  • Filled and signed balance transfer application form 
  • Latest three months' Salary Slips 
  • Six months' bank statement
  • Identity Proof (Any One of them): Pan Card, Passport, Driving License or Voter's ID card or employee identity card (as identity proof and signature proof in case of government employees).
  • Proof of address
  • Proof of Age (Any One of them): 10th or 12th Marks Cards, PAN Card, or Voters ID Card.
  • For a self-employed professional or businessperson, you need to provide documents of your business existence, academic qualifications, and financial statements for both the individuals.
  • Copy of the loan statement and complete set of documents relating to the property that is currently in possession of the present home loan lender.