A home loan balance
transfer, also known as home loan refinancing, helps borrowers reduce the
monthly EMI burden by shifting their outstanding loan amount from one financial
institution to another. When a borrower opts for a balance transfer facility,
the new financer pays the old lender the outstanding principal amount, and the
borrower needs to repay the advance to the new lender.
Borrowers usually avail
this facility to enjoy reduced interest rates and save substantially on the
total cost of borrowing. Following are a few key features and benefits
associated with home loan balance transfer in India.
Features and benefits of home loan balance transfer
●
Reduced
interest rates: As stated earlier, individuals opt for a loan balance
transfer facility to access better terms, i.e. reduced interest rates from
other lenders. When an individual avails a loan balance transfer, he/she can
lower the EMI burden due to the reduction in interest rates. Also, individuals
can use a home loan balance transfer calculator to evaluate savings on monthly
EMIs.
●
Top-up
facility: In some cases, home loan balance
transfer enables borrowers to avail a top-up facility through which
they can avail a substantial amount over and above the existing loan.
●
Customise home
loan tenor: While applying for a home loan balance transfer,
individuals can negotiate with the lender to increase or decrease the home loan
tenor as per their convenience.
Nonetheless, to avail the
loan balance transfer benefits, individuals must fulfil the eligibility
criteria set by the lending institutions.
Home loan balance transfer eligibility
Before choosing a home
loan balance transfer, individuals must
check the requisite eligibility parameters.
●
Applicant must be a citizen of India.
●
Salaried and self-employed individuals can apply
for a home loan balance transfer.
●
Applicants must maintain a high credit score.
●
He/she should have paid at least 12 EMIs.
●
Individuals should not have any outstanding dues
on existing loans.
Eligibility criteria for
loan balance transfer are subject to vary from one lender to another.
Once an applicant fulfils
the eligibility criteria, he/she must submit some essential documents to initiate
the home loan balance
transfer process.
Home loan balance transfer documentation
A home loan balance
transfer is similar to the process of applying for a fresh home loan. Hence,
individuals have to submit all the documents required while applying for the
initial loan. Though the documents required for a home loan balance transfer
vary from one lender to another, some basic ones include,
●
Passport-size photographs
●
Identity and address proof documents
●
Letter of consent
●
No objection certificate
●
Income proof documents
●
Foreclosure letter
●
Photocopy of property documents
Some lending institutions
offer home loan balance transfer facilities against minimal documentation.
Certain NBFCs provide
pre-approved offers to make the loan availing process easier. They also extend
these offers to other financial products like home loan and loan against
property, and many more. Individuals can check their pre-approved offer by
providing some basic information like name and contact details.
The application process for home loan balance transfer online
To avail a home loan
balance transfer, individuals must follow the steps mentioned below,
●
Visit the website of the respective lending institution.
●
Check various charges and terms and condition of
the new lender.
●
Apply for a balance transfer.
●
Fill in the application form.
●
Check loan offer.
●
Pay necessary fees, upload documents and wait for
approval.
While it might seem an
easy option to reduce the EMI burden, individuals must check the various costs
associated with a home loan balance transfer to avoid increasing the overall
cost.
