A home loan or housing loan means a sum of money lend from a bank or financial institutions to buy or construct a house. The loan consists of variable or fixed interest rates and various payment terms. There are various types of home loans available in the market. In this article we are going to see home loan balance transfer.
Home Loan balance Transfer
Home loan balance transfer or balance transfer of home loan or refinancing is the process of transferring the outstanding loan amount from one financial institution to another one in order to reducing the interest rates. It helps to reduce the EMI’s by transferring to the lender with a lower interest rate structure from a lender with high applicable interest rates.
Key Features of Home Loan Transfer
- Most of the financial institutions treated the home loan transfer application as new home loan application
- Transfer the home loan outstanding balance from one lender to another lender at lower interest rates
- Usually, 1% of the home loan balance have to be transferred that is payable as a processing fee to the new home loan lender.
- The borrower has only the transferred amount with charges in their new lender after the transfer is complete.
- The balance transfer can do only after a predetermined time period for completing loan that is mentioned in original loan document from an existing lender.
- Some of the financial institution may provide top-up loan along with balance transfer loan as per the eligibility of the borrower with applicable charges
An individual resident Indian, who wants to transfer home loan from one lender to another must fulfill the following eligibility. These eligibility criteria may vary across various banks and financial institutions.
||21 to 60 years
||21 to 60 years
||Min.2 years of experience
||Min.5 years of experience
||750 or above
||750 or above
Interest rates of home loan varies as per the risk score, eligibility and the type of customer. The rate of interest also varies from bank to bank and all financial institutions. Some of the interest rates of some leading home lending financial institutions are given below.
||Full waiver for homebuyers in approved project or
0.35% onwards (Min Rs.2000 to Max Rs.10,000)
||Up to 0.5% of the loan transfer amount
||Up to 0.5% of the loan amount or Rs.3000 whichever is higher
||Up to 0.5 %^ (1 crore – Max Rs.10,000, Above 1 crore up to 5 crore – Max Rs.25,000)
|Kotak Mahindra Bank
||0.25% to 0.5 % of loan amount and statutory dues
The documents required for home loan balance transfer is as same as new loan process. It varies depending on the financial institution.
Property Documents Required
- Identity Proof (Copy of Pan Card/Voter ID/Driving License/Passport)
- Address Proof (Copy of Aadhar card/Driving License/Electricity Bill/Telephone Bill/Gas Bill)
- Income Proof (Pay Slip for salaried employees for 6 months/ ITR for last 3 years, Balance Sheet & profit and loss account for last 3 years)
- Bank account statement for all bank accounts held by applicant
- Existing Loan document (if any)
The following are the common and the basic documents required for the approval of the home loan across any financial institution.
- NOC from Society / Builder
- A detailed estimate cost of the construction of the house
- Registered sale deed, Allotment letter or Stamped Agreement sale with builder
- Property tax receipts, maintenance bills and electricity bills
- Occupancy Certificate
- Receipts of the advance payments made towards the purchase of flat
- A complete approved copy of building plan
- Original of the land tax paid receipt and possession certificate as issued by the revenue authority.
- Payment receipt or bank account statements containing payments made to the builder or seller.
- The loan statement copies and complete set of documents mentioned above relating to the property of the first lender.