Balance Transfer on Your Home Loan – Good Option When Rates Change

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Balance Transfer on Your Home Loan – Good Option When Rates Change

All About Home Loan

Home Loan Balance Transfer

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The facility of a home loan balance transfer is a new option that is being provided by the housing finance lenders to the customers. Using this facility, a person can transfer their home loan from one bank to another which has lower interest rates than the present bank.

What is Home Loan Balance Transfer?

The method of a Home Loan balance transfer is the simple method by means of which a person can transfer their current active home loan from their bank to another bank. The reason for this shift is simple, the difference in the interest rates offered by the banks.

Suppose, a person P has a home loan presently from a bank ABC Bank at 10%. On the other hand, there is another bank, XYZ Bank that provides home loans at 9%, and then the person is paying 1% more to the ABC Bank. In such a case, if the person wishes to, he can transfer his loan from ABC Bank to XYZ Bank as it offers lower interest rates. This facility is available with nearly all the leading banks in the country.

Things you need to know about before you apply for a home loan

  1. Home loan Eligibility
  2. Home loan Documents
  3. Home Loan Interest Rates

Why should people go for a Home Loan Balance Transfer?

A home loan balance transfer could be a facility availed by many people. There are several reasons why someone desires to transfer their loan from one bank to a different bank. some of them would possibly be:

  1. To lower the interest rate: Once the present interest rate within the market is below the speed of interest that one is paying to the present lender then, the person will immediately choose the option of balance transfer of the outstanding loan quantity.
  2. To change the terms of your loan: If a receiver desires to increase the tenure amount, however, the present loaner may not agree to this request, in such a circumstance, selecting of balance transfer from one loaner to a different would be the higher possibility.

Steps involved in obtaining your home loan transferred from one loaner to another:

  1. Do thorough research of the lending institutions and the interest rates plus other charges levied by them and the total cost of the transfer. Only then continue and have your balance transferred.
  2. Requesting your current lender for the transfer of your home loan.
  3. The existing lender will issue a no-objection certificate and an account statement mentioning the outstanding amount of the loan.
  4. The new bank will approve your loan on the basis of these documents and will inform the existing lender of the same.
  5. The new bank will make the payment to the existing bank of the outstanding loan amount and take the property documents from them. The bank is now in possession of your property.

Important Points to be Noted:

  1. Check the home loan interest rates offered by the new lender, whether they are higher or lower.
  2. The previous lender will charge a prepayment penalty on the outstanding balance of the loan.
  3. The new bank will charge a processing fee for approving the loan.
  4. The above two factors should be carefully calculated and evaluated before applying for the transfer. It may be that the interest rates may be lower, but there are other extra charges that the bank may apply. This may cause a loss to the applicant. So they should be kept in mind.
  5. It is advised that the balance transfer is done only when the tenure of the loan is more than 5 years to make gains. It will be a loss for the individual to pay more money in the form of penalty charges and processing fees as compared to the amount that the person will pay in case of the normal interest rate.
  6. it is the choice of the applicant where to apply for a home loan, a home loan EMI calculator might prove helpful to understand the terms offered by a bank or NBFC.

Benefits of availing of a Home Loan Balance Transfer:

  1. As compared to the previous lender, the new bank will provide better services. It is important that the financial institution that the person applies to is a reputed company. Since a home loan is a long term proposition, it is better to get the loan from a suitable bank with lower interest rates.
  2. More suitable options and terms especially loan tenure etc.
  3. One can also avail of an additional top-up loan on their existing home loan using their mortgaged property.

Leading Home Loan Providers (Click to Apply):

  1. Axis Bank Home Loan
  2. HDFC Home Loan
  3. SBI Home Loan
  4. Other Bank


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