A home loan can act as one of the best financial instruments to arrange for funds during an emergency. This secured credit line allows borrowers to obtain a sizable loan amount to fund their property-related expenses.
First-time borrowers must check all the benefits offered by a lending institution before deciding on one. Benefits, such as home loan balance transfer option, low-interest rates, long repayment tenor, etc. are the advantages that one should consider before applying for credit. However, in this guide, we will only talk about the balance transfer option in a housing loan. So, continue reading to know more about the same.
What is the home loan balance transfer facility?
Almost every leading financial institution in India offers the balance transfer option. Using this lucrative feature, borrowers can transfer their outstanding home loan amount to a new lending institution. Borrowers usually opt for this feature to get better offers, such as longer tenors, low-interest rates, better customer assistance, etc. and to enhance the affordability of their existing home loan.
What are the features and benefits of home loan balance transfer?
Here are the features and benefits of opting for the home loan balance transfer feature:
Competitive rates of interest
Several lending institutions offer home loans at low-interest rates. This attracts borrowers to switch their lenders. Getting lower rates of interest reduces the monthly EMIs and also the overall interest outgo. Borrowers can accumulate this money through savings and get closer to their financial goals.
Top-up on home loan
Several reputed lending institutions in India provide top-up on the existing home loan. Borrowers can use this credit amount while transferring their housing loan to a new lender. Further, they can use the top-up amount without any end-to-end usage restrictions.
Flexible repayment tenor
Borrowers can extend their home loan tenor up to 40 years to ensure a comfortable repayment schedule. This also allows more room for savings.
Upon opting for the home loan balance transfer option, applicants must submit only a few documents. This makes the whole loan approval stage streamlined and ensures fast disbursal of the loan amount.
Eligibility criteria and documents required for home loan balance transfer
To opt for this home loan benefit, applicants must fulfill some eligibility parameters. Here are the eligibility criteria for salaried applicants:
- He or she must be an Indian citizen
- Applicants must fall in the age group of 23 to 62 years old
- He or she must have three years of work experience in the private or public sector company or any MNC
The eligibility criteria for self-employed individuals are as follows:
- Applicants must be a citizen of India
- He or she must fall in the age group of 25 to 70 years old
- Applicants must be able to provide evidence of five years of experience in the current business venture
That being said, borrowers must also submit a few documents to get approval for this facility. These documents include:
- KYC-related documents (identity proof and address proof)
- Passport size photographs
- Income proof documents or salary slips or Form 16 (for salaried employees)
- Profit and loss statements of the previous 2 months or TR documents (for self-employed applicants)
- Last 6 month’s bank account statements
- Business proof paperwork with five years of continuity in the current business venture (for self-employed applicants)
What is the home loan balance transfer process?
Willing applicants can opt for a home loan balance transfer by following these simple steps:
Step 1: Visit the official website of your preferred lending institution.
Step 2: Submit your professional and personal details, such as employment type, full name, PAN card, mobile number, PIN code, loan type, etc.
Step 3: Following this, submit the property details for which you are transferring the home loan.
Once you submit all these details, a representative from the lending institution will get in touch with you to guide you through the next steps.
Home loan balance transfer fees and charges
Here is a table illustrating the associated fees and charges for a home loan balance transfer:
For salaried employees
|Loan type||Rate of interest per annum|
|Home loan||8.60% to 15.00%|
|Home loan (balance transfer)||8.70% to 15.00%|
|Top up||9.80% to 18.00%|
For self-employed applicants
|Loan type||Rate of interest per annum|
|Home loan||9.10% to 15.00%|
|Home loan (balance transfer)||9.50% to 15.00%|
|Top up||10.00% to 18.00%|
Note: Prospective borrowers should be aware that these home loan interest rates change frequently between lenders. That’s why it’s a good idea to find out about the interest rates offered by your chosen financial partner.
The following table shows the additional costs and fees associated with a home loan balance transfer:
|Fee type||Applicable charges|
|Processing fee||Up to 7% of the total loan amount + applicable GST|
|Loan statement charges||Nil|
|Interest and principal statement charges||Nil|
|EMI bounce charges||Up to Rs.10,000|
|Penal interest||24% p.a in addition to the applicable interest rate on the overdue amount|
|Secure fee||One-time fee up to Rs.9,999|
Almost every major lending institution in our country provides pre-approved offers to departing consumers on secured credit products, including home loans and loan against property. These pre-approved offers speed up the loan application process and allow easy and hassle-free loan disbursal. Applicants must enter their names and phone numbers in the appropriate field on the lender’s website to check the pre-approved offers.
In conclusion, a home loan balance transfer option is practical if you consider the best offers that align with your financial stability and ability to repay. To avoid confusion in the future, it’s essential to understand the fees associated with a mortgage transfer. Once your home loan has been shifted to a new lender, it is important to ensure that all EMIs are paid on time. Even one missed monthly payment can hurt your credit score. A lower credit score reduces your future chances of getting approved for loans.