Here’s how to transfer the balance of your home loan

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home loan

Balance transfer of house loans refer to the process of moving the remaining balance of an existing loan from one lender to another. Simply expressed, a home loan balance transfer shifts a loan from one lender to another where the new lender fully repays the previous lender. Thereafter, the borrower begins paying equivalent monthly instalments (EMIs) to the new lender.

Steps to transfer home loan balance

Transferring balance is a straightforward task, and candidates have to adhere to some simple steps: 

Step 1: Provide an application to your current lender 

Firstly, individuals must send a letter or a form to their lender stating their desire for a balance transfer and carefully outlining their justifications.

Step 2: Collect NOC 

Their lender will send a NOC or a consent letter, and the new lender will need it when they submit their application.

Step 3: Produce relevant documents 

Then, borrowers must contact the new lender and produce relevant documents. It is essential to note that they might also be required to send a copy of their property papers, home loan balance, and interest statements, along with a completed application form and the NOC and KYC certificates.

Step 4: Wait for confirmation from the old lender 

Borrowers then need to await final confirmation from the former lender regarding closing their loan account after delivering all documents to a new lender. This confirms that the terms regulating the loan arrangement have expired.

Step 5: Pay the required fee 

Finally, individuals must sign a contract with the new lender and pay the associated expenses. They can then start paying the EMIs under the new terms.

Documents required for a home loan balance transfer 

To initiate the process of a home loan balance transfer, applicants need a few documents to prove their candidature. The list of documents required for home loan balance transfer is provided below: 

List of documents required from the existing lender

  1. NOC
  2. Letter of consent 
  3. Foreclosure letter 
  4. Home loan statement 
  5. Post-dated cheques
  6. Property documents 

Documents required by the new lender 

  1. KYC documents 
  2. Financial documents
  3. Address proof
  4. Documents of existing loan
  5. Property-related documents 

Factors to consider before opting for a home loan balance transfer 

A few of the factors to keep in mind when choosing to transfer the home loan are:

  1. Remaining tenor

Choosing a home loan balance transfer in the final stages of a home loan obligation might not be a wise decision. This is because when a financial institution determines the EMI, the initial payments are made up mostly of maximum interest amounts. In contrast, the later EMIs are made up primarily of principal. As a result, during the tenor end, a person will have already paid most of the interest, so choosing a balance transfer then may not be advantageous.

  1. Total borrowing cost 

A home loan balance transfer is primarily opted to lower the overall cost of the home loan. Because applying for a balance transfer is comparable to applying for a new home loan, most financial institutions impose processing costs, administrative fees, etc. So opting for a home loan balance transfer calculator beforehand would be a wise decision. 

To make the most out of shifting their outstanding loan, customers must conduct a thorough research to know everything about home loan balance transfer.

New candidates must note that selected HFCs extend pre-approved loan offers to simplify and speed up loan processing. These offers are available on various financial products like loans against property, home loans, etc. Borrowers can enter just their name and contact number to check their pre-approved offer.

So, candidates must follow the steps necessary for a home loan balance transfer and provide documents to their new lender. Thereafter, they can start paying EMIs at the new terms that are more comfortable for them.