Your Guide to Secure the Best Home Loan Balance Transfer Deal

Updated on: 17 Jan 2024 // 4 min read // Home Loan Balance Transfer
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A Home Loan Balance Transfer is the process of transferring an existing Home Loan to a different bank or Non-Banking Financial Company (NBFC). This facility can be availed If the borrower has found better services or a lower rate of interest at another bank.

You can opt for this if you have regularly been paying your Home Loan EMIs (Equated Monthly Instalments) to the current bank for a period of more than 12 months.

It can be applied for by an individual or jointly. If applied jointly, it isn’t mandatory for the co-applicants to be co-owners of the property.

Benefits of a Home Loan Balance Transfer (HLBT)

• Lower interest rates: The loan is provided with security in the form of a mortgage, which reduces the risk of the lender, in turn, this provides a low rate of interest on the Home Loan.  
• Prepayment facilities: Even if the person decides to transfer the balance of their Home Loan, a pre-payment facility is still offered.  
• Convenient due to less paperwork: HLBT offers convenient movement of the loan from one bank to another without any hassle and with minimum documentation.  
• A high top-up value offered: The top-up value offered is higher in comparison to Home Loans. As the loan repayment is faster with low interest, it helps in getting a loan for the top-up. You can avail up to 100% financing of the original sanctioned Home Loan.  
• Savings: Through HLBT, you can save on interest costs and the outstanding principal amount.  
• Reduction in EMIs: EMI payments can be reduced by a significant margin, depending on the bank chosen to transfer the Home Loan.  
• No additional charges: Excluding the tentative processing fee chargeable by banks, no additional cost is incurred on the HLBT.  
• Protecting credit score: Balance transfer doesn’t have any credit score requirements.  
• A large number of options: HLBT offers a lot of options for the person to choose the bank as per their preference offering the best facilities.

When to Choose a Home Loan Balance Transfer?

If you are paying a high-interest rate on a Home Loan to a bank and come across better options, you can consider more banks and their deals.  
For availing the HLBT facility, you need to consider the following:  
• The rate of interest on the transferred loan is less than the original loan.  
• Try bringing down the rate of interest on the loan while having conversations with your bank, by focusing on the right repayment history along with a pleasant relationship between the two.  
• A track record of 12 to 18 months of regular loan repayments on any existing Home Loans.  
• All the remaining payments should be made to the new bank where the balance is transferred.  
• Top up savings on the existing loan can provide ready-cash.

Home Loan Balance Transfer

Eligibility for Home Loan Balance Transfer:

Your financial standing will determine your ability to repay the loan. Additionally, crucial factors mentioned below will determine your eligibility:  
• Monthly income  
• Savings  
• Credit history  
• Current employment status  
• Previous work experience  
• Qualification  
• Age Criteria  
• Borrower’s probability in the same occupation  
• Total number of dependents

Paperwork and Documents to be given:

Find a Home Loan Balance Transfer Facility and then provide all essential documents to the new bank. Through this, the bank will determine the person’s capacity to repay the loan by considering all essential factors, past and present.

Some documents required include:

• Age and Address Proof  
• Income Proof with bank details  
• Educational qualification proofs  
• Signature Proof (A copy of the document that you have signed for the bank)  
• Identity Proof

The following paperwork (whichever applicable) should be handed to the new bank to see if you are eligible for the HLBT facility.

• Loan documents and the list of property documents, currently in possession of the existing lender.  
• Bank statements of last 12 months acting as a proof of the EMIs paid for the loan  
• Application Form and KYC  
• Photo(s) of the Primary borrower and Co-borrower(s) attached and the application form that was signed.  
• Identity Proof (includes the person’s valid Passport, Voter ID card, Aadhar card, or Valid Driving License.)  
• Residential Address proof  
• Age Proof  
• Office address  
• Income Proof  
• Form-16 for the past 3 years  
• Salary slip of the past 6 months  
• Bank account statement showing the salary credit  
• Income Tax Returns of the past 3 years, along with Profit and Loss account, Balance Sheets, audited and certified by CA.  
• Certificate of Business for proof of its existence  
• Business Profile

After considering all the essential factors and filing all the necessary paperwork with valid identity proofs, you can look for a Home Loan Balance Transfer as per your requirements. Our experts at MyMoneyMantra can help you through this process and help you get the best deal.