How to Transfer Your Home Loan: Step-by-Step Guide

home loan balance transfer

A Home Loan Balance Transfer allows borrowers to transfer their existing home loan to a new lender offering better terms. This option is ideal for those looking to benefit from lower interest rates, reduced EMI amounts, or better repayment terms. By switching lenders, borrowers can potentially save money on interest and shorten the loan tenor. It also offers the flexibility to renegotiate terms such as the loan tenor and additional top-up loans. However, it’s important to carefully assess processing fees, charges, and the overall benefits before opting for a balance transfer.

What is a Home Loan Balance Transfer? 

The home loan transfer facility is a service that financial institutions offer existing home loan borrowers using which existing home loan borrowers can transfer the remaining home loan amount to another lender willing to refinance the loan on more profitable loan terms, ideally a lower home loan interest rate or a longer repayment period. 

In the next section of this article, we look at the home loan balance process.

Home Loan Transfer: A Step-by-Step Guide 

The home loan transfer process is fairly straightforward. Here’s what the process involves. 

  1. The first step in the home loan balance transfer process is informing your current lender of your intent to transfer your current loan to another lender by writing to them. If your lender has no objection to you transferring your home loan to another lender, they will release a No Objection Certificate or NOC. The NOC is one of the required documents for home loan balance transfers. 
  2. Along with the home loan NOC, apply for a home loan balance transfer to the new lender of your choice by filling out the home loan balance transfer application form. Make sure to enter the correct information and be honest about income, existing debt, and other things. 
  3. Submit the required documents for a home loan, including the KYC paperwork, interest settlements, income and age proof documents, property documents, etc. After you submit all the required documents, your lender will take a few days to process your loan application and decide whether or not to extend you a loan. 
  4. If the new lender you have applied to decides to entertain your home loan balance transfer request, they will pay off your current lender and now, your loan amount with your current lender will be considered closed. 
  5. Once your account with your old lender is closed, you will need to pay the home loan balance transfer fee to your new lender and sign the new contract. After this, your account will be considered closed.

A home loan transfer is an excellent option if you are struggling to accommodate your current EMIs. However, borrowers must keep in mind that the home loan transfer process makes the most sense when opted for at the right time, which is during the early years of one’s home loan tenor when a major portion of one’s interest is yet to be repaid. Ideally, one should opt for a home loan balance transfer during the first 5 to 10 years of the home loan tenor. Further, there should at least be a 25 bps difference in the old and new home loan interest rates if you want the balance transfer to prove profitable and allow one to save a decent amount of money.

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