“Home loan balance transfer is also known as refinance home loan. It is a process where a housing loan is paid off using another loan. Generally, borrowers transfer the balance of a loan in order to attain lower rates of interest. In case a bank or other financial institutions are unwilling to reduce the interest rates on a particular loan, it can always be refinanced with a help of another bank.
How to Transfer a Home Loan Balance
In order to transfer a home loan balance, follow the steps mentioned below.
Step.1: Request your current lender for the documents required to refinance the loan.
Step.2: After the lender provides you with a consenting letter with the outstanding loan amount, these documents will have to be provided to the new lender you wish to refinance your loan with.
Step.3: The new lender will then transfer the outstanding amount to the old lender.
Step.4: The old loan account will now be closed, and all future payments will go towards the loan you have availed with the new lender.
Step.5: The old lender will then hand over all the property documents to the new lender, officially completing the refinancing process.
Lowest Home Loan Transfer Rates From Top 10 Banks
| Bank | Lowest EMI | Home Loan Transfer Rates |
|---|---|---|
| SBI Home Loan | Rs.755 for 30 Years | 8.30% |
| Bank of Baroda | Rs.755 for 30 Years | 8.30% |
| Union Bank of India | Rs.755 for 30 Years | 8.30% |
| HDFC Home Loan | Rs.758 for 30 Years | 8.35% |
| Axis Bank | Rs.758 for 30 Years | 8.35% |
| Indiabulls | Rs.758 for 30 Years | 8.35% |
| PNB | Rs.758 for 30 Years | 8.35% |
| OBC | Rs.802 for 25 Years | 8.45% |
| Central Bank of India | Rs.769 for 30 Years | 8.50% |
| LIC Housing Finance | Rs.769 for 30 Years | 8.50% |
Compare Home Loan Transfer Rates From Other Banks
| Bank | Lowest EMI | Home Loan Transfer Rates |
|---|---|---|
| Citibank | Rs.805 for 25 Years | 8.50% |
| IIFL | Rs.769 for 30 Years | 8.50% |
| Indian Bank | Rs.868 for 20 Years | 8.50% |
| Standard Chartered Bank | Rs.871 for 20 Years | 8.55% |
| Dena Bank | Rs.809 for 25 Years | 8.55% |
| United Bank of India | Rs.772 for 30 Years | 8.55% |
| IDFC Bank | Rs.772 for 30 Years | 8.55% |
| PNB Housing Finance | Rs.776 for 30 Years | 8.60% |
| DBS Bank | Rs.874 for 20 Years | 8.60% |
| DHFL | Rs.776 for 30 Years | 8.60% |
| Kotak Bank | Rs.874 for 20 Years | 8.60% |
| Vijaya Bank | Rs.780 for 30 Years | 8.65% |
| Jammu And Kashmir Bank | Rs.994 for 15 Years | 8.65% |
| Indian Overseas Bank | Rs.780 for 30 Years | 8.65% |
| HSBC Bank | Rs.815 for 25 Years | 8.65% |
| Canara Bank | Rs.780 for 30 Years | 8.65% |
| Bank of Maharashtra | Rs.783 for 30 Years | 8.70% |
| Punjab and Sind Bank | Rs.787 for 30 Years | 8.75% |
| Corporation Bank | Rs.794 for 30 Years | 8.85% |
| Federal Bank | Rs.805 for 30 Years | 9.00% |
| Karur Vysya Bank | Rs.846 for 25 Years | 9.10% |
| South Indian Bank | Rs.812 for 30 Years | 9.10% |
| Yes Bank | Rs.863 for 25 Years | 9.35% |
| Deutsche Bank | Rs.929 for 20 Years | 9.45% |
| Karnataka Bank | Rs.841 for 30 Years | 9.50% |
| Lakshmi Vilas Bank | Rs.935 for 20 Years | 9.55% |
| LT Housing Finance | Rs.870 for 30 Years | 9.90% |
| City Union Bank | Rs.1,069 for 15 Years | 9.90% |
| Reliance Capital | Rs.878 for 30 Years | 10.00% |
| Dhanlaxmi Bank | Rs.972 for 20 Years | 10.10% |
| GIC Housing Finance | Rs.982 for 20 Years | 10.25% |
| RBL Bank | Rs.930 for 25 Years | 10.30% |
| DCB Bank | Rs.997 for 20 Years | 10.48% |
| Edelweiss | Rs.944 for 25 Years | 10.50% |
Key Features of Home Loan balance transfer
Home loan balance transfer is a process of transferring your home loan amount from one bank to another. This is done mainly to lower the rates of interest or avail better service from the bank willing to takeover the home loan. This process is also known as refinancing and home loan take over.
- Home loan balance transfer is a process wherein your home loan account will be transferred to another bank, meaning all future payments towards your home loan will have to go to the bank that has taken over the home loan.
- Home loan balance transfers usually attract a processing fee of 1%, payable to the new bank. This is important to note as this may overshadow the savings you may incur if you transferred the loan, depending on the loan amount. However, the processing fee varies from bank to bank and is not fixed at 1%
- Refinancing your home loan usually involves the same process as availing a new home loan
- A home loan can be refinanced only after a certain time period, predetermined by the loan agreement
- When the home loan is taken over by another bank, the existing bank transfers the outstanding principal amount to the new bank
Benefits of home loan balance transfer
- Transferring your home loan to another lender may lower your Equated Monthly Instalments (EMI) payable
- The rate of interest on the home loan can reduce in the event you choose to transfer your home loan to another bank
- There is a likelihood of your credit score increasing by transferring your home loan
- The terms of the home loan can be negotiated, and you can choose the lender that suits your needs the best
- The tenure of the home loan can be chosen to reduce, helping you save a lot on the total interest payable
- You can also opt for a bank that provides better customer service than the bank that is currently servicing you
- Refinancing your home loan has become hassle-free in this age where banks have incorporated modern technology into their operations.
Eligibility Criteria for Home Loan Transfer:
When choosing to move your existing home loan to another bank, take care of the following requirements:
- The applicant’s age must not be lesser than 21 years and not over 60 years at the time of application. The latter is 65 years for Self-Employed individuals.
- The applicable loan amount is based on a number of factors, including, age of the applicant, current income, number of co-applicants, debt, the applicant’s retirement age, etc.
- The applicant must have a clear history of 12-18 months worth of unbroken repayments on his/her current home loan.
- The applicant must have a minimum work experience of 2 years, with the last 1 year spent in the current organization. For self-employed individuals, the expectation is 2 years in the same profession with the filing of the requisite ITR.
- Additionally, some banks may require a definite gross family income and a clear credit history, minus any red flags and a minimum CIBIL score of 700 points.
Documents Required for Home Loan Transfer :
Kindly carry along the following documents when you approach your prospective lender with regards to the home loan balance transfer. The success of any enterprise is in the documentation, right?
- Fully completed Application form.
- The applicant’s self-attested photographs.
- Identity proof (could be any government issued ID- PAN Card, Voter’s ID etc).
- Residential address proof.
- Proof of Age (10th or 12th Marks Cards, PAN Card, Voter’s ID etc).
- Official Address (Applies for self-employed, can be rent agreement, utility bills, lease etc).
- Income Proof in terms of prior 6 months bank account statements that shows salary credit, last 6 months salary slips and Form-16 accounting for the last 3 years.
- For Self-Employed individuals, the income proof is established by-Last 3 years ITR (self and business),Last 12 months bank account statement (self and business),
Profit and Loss Account,
Balance Sheets that are thoroughly audited by a certified CA,
Complete Business Profile and Proof of Business Existence.
- Bank statements amounting to last 12 months of the account from wherein the home loan EMIs were deducted.
- A complete list of documents relating to the property, that is currently in possession of the present home loan lender. Also, the Loan statement copy.
4 Things to Keep in Mind before Transferring Your Loan
Although the process of refinancing you Housing Loan is a simple process in this day and age, one must be mindful about the process. An impetuous move to transfer the loan may cause more harm than good. Keep the following points in mind before transferring your home loan balance.
- Credibility – It is important that the new potential lender is credible in lending out money and the reduced interest rate offered is not just a promotional gimmick.
- Consider all costs – Sometimes it can be easy to neglect costs that are associated with refinancing a housing loan. At the end of the day, you are transferring the housing loan balance to save money. If the costs like stamp paper, documentation charges, processing fee, etc. outweigh the savings you receive, it becomes illogical to refinance your loan.
- Quality of service – Sometimes, the service provided by a particular ban can overshadow the marginal savings received by refinancing your mortgage. It is important to do your research on the quality of customer support that a particular lender provides.
- Go through the fine print – A lowered rate of interest should not cause an inconvenience to you in future. Reading the fine print of the agreement from the new lender and the existing lender as well will give you all the information required to base your decision on whether or not to refinance your home loan.