Home Loan Balance Transfer

The interest rate on an existing house loan, as well as the flexibility provided by the lending institution, impact whether one stays with the same loan or considers switching. Customers can transfer their outstanding debt to another banking institution for a lower interest rate and/or other benefits. This is known as a home loan balance transfer.

The goal of a home loan balance transfer is to save money on interest by transferring the loan balance to a lender with a cheaper interest rate. When interest rates in the economy fall, not all lenders reduce interest rates in the same way for a variety of reasons, which is why a home loan balance transfer is an appealing choice, especially if you are unhappy with your current service. 

Pay note to the processing charge (which is normally up to 1% of the loan amount) owed to the new lender/bank while undergoing the home loan balance transfer process. If your credit score (which represents your credit history and creditworthiness) is acceptable or if your lender has a special campaign for a specific time, they may lower or waive the processing charge to gain business.

It’s crucial to proceed with caution when considering a house loan balance transfer because it could have a long-term impact on your funds. Recognize the reasons for your desire to conduct a home loan transfer. Are you looking for a loan that is more flexible or has a shorter or longer term? Looking to cash in on the growing value of your home’s equity? Consider all of the aspects and charges before making the switch, and conduct a cost-benefit analysis for your home loan balance transfer.

Who Is Eligible to Participate? 

Housing finance providers are more likely to give balance transfer offers to borrowers who have paid at least 12 EMIs and have a good credit rating. 

  1. You must be of Indian nationality and between the ages of 21 and 60. 
  2. In the weeks leading up to your loan transfer application, your credit score should not drop. Even though your credit score was good when you applied for the loan, if it drops by the time you move, banks may reject your refinancing application.
  3. You must have worked for your current employer for a particular number of years or your company must have been in operation for a period specified by the lender. This time frame is usually two years.
  4. You should be able to repay the loan every month or earn the needed minimum wage. Some banks may additionally impose a minimum gross family income based on the lender’s requirements.

Documents Required 

If you are planning to make a home loan balance transfer application, make sure to keep the below documents ready:

1. All important property documents currently in the possession of the previous home loan lender/bank. 

2. You’ll also need a copy of the loan statement (preferably an attested copy by the bank). 

3. Last 12 months’ bank statement. The statement should be of the bank account from which the EMIs were taken. 

4. A no-objection certificate from your current bank.

In addition to these documents, your chosen bank/lender would also demand: 

1.Statements of income 

2.Salary stubs and Form 16 

3.Recently filed income tax returns 

4.Age-proof(Aadhaar, Passport, PAN card, Driving License, etc.) 

5.Proof of address (Aadhaar, Passport, Driving License, electricity bill, telephone bill, ration card, etc.) 

6.Proof of photo identification (Aadhaar, Passport, PAN card, Voter id, Driving license, etc.)

Final Thoughts

A home loan balance transfer is not for everyone. Keep in mind that a home loan balance transfer would make sense only when you are in the initial tenor of your home loan and when your chosen lender is offering you such a low home loan interest rate that the interest rate, in the long run, will cover the fees and charges that your new lender will apply.

By JenniferKIM

Jenniferkim is a General Blogger & writer who has been extensively writing in the technology field for a few years. He has written several articles which have provided exciting and knowledgeable information on Finance, Business, Tech, Travel, Sports in Italy.

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