Guide to Home Loan Balance Transfer

Home Loan Balance Transfer is a process of transferring existing home loan into another banks or NBFC. This facility is taken usually if the borrower finds better services and lower interest rates at different bank. In order to opt for this all you need to do is just to fill the Home Loan Balance Transfer application form along with calculating savings on top up and home loan balance transfer. Balance transfer option is chosen by most people as it will lower the monthly installments by paying lower repayment amount. Helps in saving a lot of interest that can be used on other useful things. It offers attractive interest rates that will turn your home loan to be much easier to the pocket and affordable.

Home Loan Balance transfer does not just mean saving money, it also means one can make use of the same for investing in various other options. After-all having a home loan and owning a house is not the end of the journey.  Balance transfer that is switching to another bank the outstanding loan amount may give the borrower better offers and services. There is no doubt that a balance transfer will definitely reduce the EMI payment, one –size will not fit everyone’s needs that finding the best one that suits your requirements is essential.

Differences between Home Loan and Home Loan Balance Transfer

Home loan and Home loan balance transfer is totally unique and it is taken at different scenarios. Basic differences are highlighted below.

Home Loan: Home loan is all about getting the benefit of the fund for purchasing a house which can be repaid within a certain period of time. This money if offered with a rate of interest on the same. It helps you in owning a property. Lot of documentation is required. Age and credit worthiness of the individual plays a very crucial role.

Home Loan Balance Transfer: This is an option available to those who have been paying home loan EMIs with a bank for more than 12 months. It offers them to move the existing loan to a different bank that offers lower interest rate and better services. There is no ownership transferring involved. It simply moves the home loan from one bank or NBFC to another one for more attractive benefits. Lower interest rates will help in increasing the savings on an individual.

A home loan to clear an existing home loan.

The Benefits of Balance Transfer

Unless home loan balance transfer is really beneficial and reliable nobody would be ready to move the risk off loan to a different bank. Some of the benefits that can be availed through home loan balance transfer are:

• This offers lower interest rates: As there is security provided for the loan in the form of mortgage, the risk for the lender is low, due to this reason the same reason rate of interest on mortgage loan is very low.
• Offers pre-payment facilities: Many have the question whether balance transfer will block the chance of loan pre-payment. The answer is no, even if you did a balance transfer of your home loan, it can be pre-closed at your discretion.
• Hassle free and less paperwork involved to gain maximum benefits: Moving home loan from one bank to another is not a tough and time consuming task; this can be easily done with the help of minimum documentation.
• Top-up value offered will be higher as compared to what is offered from home loan bank. The loan repayment will be faster with fewer amounts towards interest; this will help in getting huge amount of loan for top-up requirements.
• Interest saving apply to your current EMI, outstanding principal amount, existing rate of interest charged by your bank.
• Reduction in monthly EMI payment up to 5% depending on the bank you choose to transfer home loan.
• No additional charges apart from the tentative processing fee: Only fee banks charge processing fee on home loan balance transfer plus no additional cost will be involved in the transfer.
• Safeguard CIBIL Score: There is no need of CIBIL requirements for a balance transfer. This will help you to have the CIBIL scoring intact.
• Option from 25+ banks: Lot of options is available to choose the best banks that offer good facilities.

When should you go for Balance Transfer?

If you think you are paying a huge interest rate on home loan with bank then it’s time to think of alternatives that are available. This is exactly when you need to think of home loan balance transfer option if there are other banks that can offer loan at lower interest rates with maximum benefits.

To simplify avail a home loan balance transfer when other bank:

• Offers a low-interest rate.
• When you try to have conversations with your bank to bring down the rate of interest on your loan, by considering the right repayment history as well as a generally pleasant relationship between both.
• A decent track record of about 12 to 18 months flawless loan re-payments on the existing home loan.
• Any remaining payments will be made to new the new bank to which the balance is transferred
• Transfer the existing home-loan at the rate of interest that is less than the original loan
• Top up an existing loan in order to get ready-cash for any needs
• The process of procuring a home loan is now stress-free and the amount due for the installments is calculated on an individual basis.

Features Offered by Home Loan Balance Transfer

• As explained above, a home loan balance transfer is the process of shifting your existing home loan from one bank to another in terms to reduce the interest rate to save some money.
• A home loan balance transfer is generally refinancing your home loan, and it usually involves the same process as the process involved in availing a new home loan.
• Home loan balance transfers generally come at a processing fee of 1%, payable to the new bank. This is important to know as this can overshadow the savings you are thinking to get if you transferred the loan, depending on the outstanding loan amount.
• With a Home loan refinance, your home loan account from your lender will be transferred to another lender, which means all your further payments towards the loan will be made to the new lender who has taken over your home loan.
• A home loan balance transfer can opt only after a certain time period. Generally, all the banks have a certain time as a lock-in period, and during this period one cannot go for a refinancing option. so, before you decide your home loan lender and sign the loan agreement, it’s important to check for the lock-in period.

Eligibility Criteria for Home Loan Balance Transfer

The eligibility of the borrower to repay the loan depends on their financial eligibility. The following factors play a crucial loan with regard to the same:

• Annual or Monthly income
• Savings and credit history
• Source of income
• Work experience
• Qualifications
• Age
• Probability of borrower continuing in the same occupation
• Number of dependents

Home loan transfer can be applied by any individual solely or jointly. The co-applicants need not necessarily be the co-owners of property, it is quite optional and at the borrowers discretion.

Documents Required for Home Loan Balance Transfer

Some of the common documents requested by all banks are:

• Age proof along with address proof
• Income proof plus banking details
• Educational qualifications proofs
• Signature Proof and Identity proof

Capacity to repay the loan takes factors such as age, qualifications, income, and spouse’s income, number of dependents, assets, savings history, liabilities, stability and continuousness in occupation in consideration. The applicant is called as the individual and the co-applicants can be applicant’s spouse, parents, or even major children. The co-applicant need not be co-owner of house, but co-owner of property will have to be the co-applicant. In Floating-rate of interest loans any change in the base rate will be having a direct effect on interest rate of the Home Loan.

Owning a house is more like a dream come true for many of us. So let us not take the risk of unplanned and uncertain event striking us. For this along with the home loan balance transfer you can choose the insurance option in order to cover the loan liability. This is an easy way to retain the peace in your family.

Paperwork Required:

Steps to follow when you go for a Home loan balance Transfer

Step 1:  Cost Analysis
When you decide to go for a home loan balance transfer than the first thing which you need to do is a market analysis where you need to compare for the rates which you will get o the transfer of your current ongoing home loan. You should only go for a home loan transfer when you can get a home loan at a cheaper rate than the existing one. The second important thing is to check how much you will be able to save when you go for a transfer. Remember balance Transfer is only advisable when the savings are considerably significant.

Step 2: Get the Documents from the Existing bank
It is very important to get all the documents from your existing bank. These documents include- No objection certificate, the pre-closure letter and the list of your payment history regarding your loan.

Step 3: Apply with the New Bank
After you get all the required documents from your previous bank you can then easily apply with other banks which you found is offering home loan to you at a comparatively lower interest rate. Submit all the required documents along with the application form.

Step 4: Credit Approved
At this stage, The new bank will check for all the documents and verify with your previous bank. The bank will also look for your credit history and the ownership documents. If everything went well the bank will approve your credit.
Hence, you will be able to transfer your home loan easily and effectively without any hassle.

HDFC Bank Home Loan Balance Transfer Details:

Maximum Loan Amount:

REPAYMENT OPTIONS

Step Up Repayment Facility (SURF):

This repayment facility offers the option where repayment schedule can be linked to expected growth in the income. Through this one can get higher loan amount as well as pay low EMIs in initial years. Consequently, the payment is accelerated proportionally with the expected increase in the income.

Flexible Loan Installments Plan (FLIP):

This plan offers a custom-made solution to suit the repayment capacity that is likely to adjust during the period of loan. The home loan balance transfer is structured like that EMI will be higher at the initial stages of the loan repayment and it will subsequently decline in proportion to income.

Tranche Based EMI:

If one is purchasing an under-construction property then they generally need to pay only interest on loan amount that is taken until final receipt of the loan amount. Only post this payment of EMIs is required. In case if you opt to start principal payments immediately then you have the option for the same with the help of this facility.

Accelerated Repayment Scheme:

This option provides the applicant the rigidity to increase EMIs year after year according to the increase in the income rise – this will result in repaying the home loan amount much faster.

Telescopic Repayment Option:

Through this option the applicant will get longer payment tenure which is up to 30- 40 years depending on the bank. This also means enhanced eligibility of loan amount and lesser EMIs.

The main two types of home loans balance transfer available in India are secured loans transfer and unsecured loans transfer.

a. Secured:

Secured loan is where there is a need for guarantee or security against the sum borrowed like a fixed or movable asset. In case of default of the loan amount, ownership of the security will be taken over by the bank. Usually car loans and mortgage loans are secured loans. The interest rate of these types of loans will be comparatively less as the risk for the lender is low even though there are many other factors that decide the rate of interest.

b. Unsecured:

Unsecured loan does not require any security, but the lender will charge a high rate of interest on the money borrowed. In case of default, the lender will seek legal assistance for the loss incurred. It is just as higher the risk of the loan, higher will be the rate of interest.

Breakdown of Steps Involved

High level explanation is here to make things easy for understanding, in detail explanation is there further below to help you assist.

• Firstly figure out your total savings and exact cost of switching home loan.
• Get a NOC (No Objection Certificate) from you bank that has existing home loan along with a foreclosure letter, payment history and list of all documents.
• Apply to your preferred bank with all required documents. Document requirements will differ from bank to bank.
• After submission of documents extensive background checks on credit history, ownership, etc. is conducted by the bank before providing credit approval.
• In the final stage, complete the documentation process with your preferred bank and existing bank.

The simple 5 step procedure is:

1. Cost benefit analysis
2. Get NOC from bank
3. Apply to new bank
4. Credit approval
5. Documentation with chosen bank

Best Banks for Home Loan Balance Transfer

Some of the best banks that offer home loan balance transfer are:

HDFC Home Loan Balance Transfer Eligibility

HDFC offers home loan balance transfer to those who approach with financial needs. It has fast approval processes with minimal and easy documentation. The list for the same is here:

Documents Required:

• Identity proof (passport, driving license or voter ID card)
• Address proof (ration card, electricity bill, telephone bill, passport or rental agreement)
• Latest 3 month’s bank statement or at least 6 months passbook of bank
• Recent salary slips

Eligibility Criteria:

• Aged between 21-60 years
• Minimum 2 years of total work-experience with at least 1 year tenure with current employer
• Minimum INR 12,000/- per month and net income should be INR 15,000 if located at Delhi, Bangalore, Cochin, Chennai, Mumbai, Ahmedabad and Calcutta.

ICICI Home Loan Balance Transfer Eligibility

ICICI bank offers competitive pricing and also maintains transparent process. It is possible to get home loan balance transfer to ICICI Bank within just 2 days from this bank if you have all necessary documentation and if you meet all criteria.

Documents Required:

• 2 passport size photographs
• Identity proof: (passport, voters ID, driving license or pan card).
• Address proof: (lease agreement, less than 3 months old utility bill or passport).
• last 3 months’ Bank statements
• Latest 3 months’ salary slips

Eligibility Criteria:

• Aged between 26-60 years
• Minimum 2 years of total work
• Minimum INR 17,000/- per month and net income should be INR 20,000 if located at Pune, Bangalore, Chennai, Hyderabad and Calcutta

Axis Bank Home Loan Balance Transfer Eligibility

Axis Bank offers fast home loan balance transfer  service with less interest rate.  It has very transparent and flexible in its eligibility criteria.

Documents Required:

• 2 passport size photographs
• Identity proof: (passport, voters ID, driving license or pan card).
• Address proof: (lease agreement, less than 3 months old utility bill or passport).
• last 3 months’ Bank statements
• Latest 3 months’ salary slips

Eligibility Criteria:

• Aged between 21-60 years
• Maximum limit INR 1.5 million.
• Minimum INR 15,000/- per month net income

Citibank Home Loan Balance Transfer Eligibility

Citibank is one of the best banks for home loan balance transfer, it has good scrutiny and offers loan for genuine applicants.

Documents Required:

• No guarantor required
• Identity proof: (passport, voters ID, driving license or pan card).
• Address proof: (lease agreement, less than 3 months old utility bill or passport).
• last 3 months’ Bank statements
• Latest 3 months’ salary slips

Eligibility Criteria:

• Aged between 26-60 years
• Minimum INR 30,000/- per month net income

Capital First Home Loan Balance Transfer Eligibility

Capital First has been rated pretty good for service and offers great options to its customers.

Documents Required:

• Relationship proof
• Identity proof: (passport, voters ID, driving license or pan card).
• Address proof: (lease agreement, less than 3 months old utility bill or passport).
• last 3 months’ Bank statements
• Latest 3 months’ salary slips

Eligibility Criteria:

• Aged between 21-60 years
• Minimum INR 15,000/- per month net income.

Comparison of Home Loan Balance Transfer of Top Banks in India

Things to consider before you go for a Home Loan Balance Transfer:

• Do a thorough understanding on your existing home loan to understand the interest rate and other benefits offered.
• Do a comparison with other banks that offer home loan for same loan amount. The benefits and features will differ according to the loan amount, thus compare for the outstanding loan amount that is yet to be repaid.
• Go through the new bank’s review to understand its features and level of customer service
• Post all these if you still feel there is benefits offered by other banks as compared to what you are getting from the existing bank, start the home loan balance transfer procedures.
• It is important to be aware that NOC- No Objection Certificate and other relevant documents are required from the existing bank along with other documents.
• Identify the reason for reduction in credit score, it could be mainly because of late payments of credit cards, loan EMIs etc. Defaulting and late payment is the core factor for bad credit scores thus ensure to have a good track record at all times.
• Keep in mind to never default any payments in the coming years. Make all payments on time also keep sufficient funds in your account for ECS.
• If you have too many rejections from Credit cards and personal or home loans, take a break and stop applying. This will help in bringing up the score and then apply though Credit scoring doesn’t have much role in home loan balance transfer it is good to keep a good record in any case.
• Loans getting close to tenure completion are great news! But don’t make use of this chance to apply for a new one. It is advisable to give at least 3-6 months break before applying for a fresh one.
• Remember to always keep sufficient balance in your credit cards; this will help in analyzing proper credit utilization. Using too much or too less of credits is not a great sign.
• Check which rate of interest to choose between fixed and floating interest rate. Unfortunately only few banks offer this option, while most banks offer just floating rate of interest. The difference between fixed and floating rate of interest is mentioned below:

Apart from all the above listed ones, the bank will consider the location of the borrower, loan amount requirement, credit score, loan term, loan type and most importantly the age of the applicant. The younger you are, more benefits can be availed and getting loan will be easier for longer tenure. If you have a good track record of existing bank’s EMI payment, it will help you get home loan balance transfer in a hassle-free and simple manner.

Apply for Home Loan Balance Transfer
(Updated 08-05-2019)