Home Loan Balance Transfer – Things To Consider

Home Loan EMIs can be pretty taxing on your pocket. To make things a little easier, you can always opt to transfer your Home Loan from your current bank to a new bank with better interest rates. Almost all banks in India allow you to transfer your Home Loans to other banks.

When transferring your loan though, it’s not just the lower interest rates that you should consider. There are several other factors that you should be aware of. We’re going to help you understand those factors so that you make an informed decision.

How does it work?

Transferring your existing Home Loan to a new bank is actually a fast and simple process. The new bank will very likely give you good discounts or perks and promising interest rates compared to your current lending bank.

Instead of hurrying up the process of transferring your Home Loan to a new bank, take some time to go over these points:

• Service Quality: Double-check on the quality of service offered by the new lender before transferring your loan. You never know how they will treat you later on, once your loan has been transferred. It’s always good to be cautious, isn’t it?
• Credibility Matters: Ensure that the new bank has good market credibility and the slashed interest rates are not just a publicity gimmick.
• Fine print issues: Understand the policy clauses of both your current lending bank and the new bank before you take the leap as there may be many hidden clauses which you may have overlooked.
• Applicable Costs: Calculate costs like processing fee, stamp duty and other transfer-related charges before transferring your loan.

Eligibility for Home Loan balance transfer

When you transfer your Home Loan to a new bank, you should fulfil the following criteria:

• You should be within the age bracket of 21 to 60 years.
• You must have a clear history of 12-18 months of timely payments on your existing Home Loan.
• You should have a stable employment history and should have been working in your current organization for at least the last one year.
• Some banks may even require a minimum CIBIL score, gross family income and clear credit history

Documentation required for a Home Loan balance transfer

When you wish to transfer your existing Home Loan to a new bank, keep these documents handy:

• Application form duly filled and signed.
• Proof of income and age.
• Residential address proof.
• Salary slips for the last six months and Form-16 documents for the last three years.
• Bank statements from where the current Home Loan EMIs are being deducted.
• Loan statement copy.
• List of documents related to the property.
• Documents related to the existing Home Loan.

Application process

Once you have all these documents ready, the actual Home Loan transfer process is pretty simple:

• Submit the transfer request to your current lending bank.
• The bank will then issue a No-Objection-Certificate and a statement mentioning the pending balance on your Home Loan.
• These documents then need to be submitted to the new bank. Both the banks will then take care of the back-end documentation process.
• All pending ECS or post-dated cheques will be deemed cancelled and you will need to submit fresh cheques for the remaining amount to the new bank.
• In some cases, your current bank may levy some pre-closure charges.

Follow these steps and your Home Loan balance transfer is done, just like that!

So, like anything in life, take all the factors into consideration, weigh the pros and cons and make your decision wisely.