Home Loan Balance Transfer
A home loan balance transfer is a process that allows you to transfer the outstanding balance on your home loan from current lender to new lender, especially one which offers lower interest rates. Almost all leading banks and NBFCs offer a home loan balance transfer. The transfer of a balance is a smart choice if you are not satisfied with your current lender. With a home loan balance transfer, you can enjoy some benefits, including lower interest rate, top-up loan facility and extended loan tenure.
Why do you need a Home Loan Balance Transfer?
Benefits of switching to the new home loan lender include:
- You can enjoy reduced EMI every month
- You can save a big amount of money from being paid as the interest on the loan
- You have options to get a top-up loan at the same interest rate
Under what conditions you should go for a Balance Transfer?
- When the new lender is willing to offer lower interest rates
- Not happy with customer services of the current lender
- If you need a top-up home loan at lower interest rates
Factors to consider before going for a Balance Transfer
- Evaluate the profits
- Consider the processing fee and other associated charges
- Read the fine print carefully
How Home Loan Balance Transfer works?
Transferring a home loan
from one lender to another is simple and hassle-free process. All you need to do is collect some import information, like outstanding principal amount, the loan amount you have paid till date, current rate of interest, and on whose name the demand draft should be made, from the current lender. Then approach the new lender to apply for a balance transfer.
Home loan Balance Transfer charges
Each lender has its own home loan balance transfer rules and charges. You should enquire about the cost involved before transferring the outstanding balance on your home loan to a new lender. New lender may charge you some percentage of the principal outstanding as a processing fee. If the outstanding balance being transferred is high, the processing fee may cost you more than you save on interest reduction. Hence, it is judicious to check the home loan balance transfer fee and request the lender to reduce and waive off it.
Home Loan Balance Transfer calculator
Use the home loan balance transfer calculator to figure out the reduction in EMIs and the cost of the loan, resulting from a home loan balance transfer. Using home loan balance transfer calculator is pretty simple; complete the following steps to find out profits from the balance transfer.
- Enter the principal outstanding of your existing home loan
- Enter the balance loan tenure of your home loan
- Enter the interest rate offered by the new lender
Documents required for Balance Transfer
Documents required for a home loan balance transfer may vary from one lender to another lender. Here is a common checklist of the documents required for a home loan balance transfer.
For salaried professionals
- 3 months’ salary slips
- 3 months’ bank statements showing salary is being credited
- Identity proof: Voter ID card / Aadhaar card/ passport/ driving license
- Address proof: Telephone bills / electricity bills / water bills (not more than 3 months old)
- PAN Card
- Filled home loan balance transfer application with passport size photographs
For self-employed individuals
- PAN Card
- Balance Sheet and Profit & Loss Statements, with relevant annexures and schedules, from the last 3 years
- Current account statements of the business
- Savings account statements of the individual