All About Home Loan Balance Transfer

Buying a new and better home is a dream for everyone. For that, most of us opt for a home loan. But home loans are not very cheap; they have a high-interest rate levied. 

When you buy a home loan, after some time, you observe that another bank offers you home loans at a decreased rate of interest. In such cases, you have a facility to transfer your remaining home loan balance to another bank. We will read all about home loan balance transfer.

What Is Home Loan Bank Transfer?

When you take up a loan, you pay interest at a certain pre-determined rate. But after a year or more, you observe that another bank is giving home loans at a decreased rate of interest. In such cases, you can transfer your entire remaining amount into another bank. 

If you have diligently paid the premiums in the past, there might not be an issue for you to transfer your loan. 

You also need to collect certain documents from your bank. There are also charges laid when you transfer your home loan to another bank. 

If you transfer the funds after most of your loan is already paid, it does not make sense as you may have to pay more money than before. But if most of your EMIs are remaining to be paid then, you might get more considerable savings even with minimal changes in the interest rates. 

Differences Between Home Loan And Home Loan Balance Transfer

Home Loan and Home Loan Balance Transfer are completely distinct and are availed at different point of time: – 

Home Loans: 

 It is a facility to get funds so that you can own a property. It is mostly taken to buy a new house, plot, flat, etc. Money has to be paid at a certain interest in a certain period. It requires a lot of documentation period, and here the person’s credit score matters the most.

Home Loan Bank Transfer:

After you have completed paying premiums for a minimum of 12 months, then you have the facility to transfer your loans amount to another bank for lower interest rates and better services. This transfer cannot involve a change of ownership; only the previous bank transfers your loan to the new bank. When availed thoughtfully, this transfer helps in saving a load of money. 

The Benefits Of Home Loan Balance Transfer

a. Lower Interest Rates: -The risk involved in transferring your home loan is quite less. Hence, banks are able to give a lower interest rate.

b. Less Documentation: – Paper-work involved in this case is minimum, and the process is also very easy and hassles free.

c. The offered top-up loan value will be higher as compared to the previous account where the loan was held. Loan repayments will also be faster with fewer amounts.

d. Interest saving applies to your current EMI amount and principal amount.

e. Reduction in EMI payments up to 5%; this will depend on the type of bank you choose.

f. Apart from the minimum processing fees, maximum banks do not levy any other fees.

g. There is no need for the property-related documents in the processing of the transfer.

h. Almost all the commercial banks offer the transfer of the home loan.

i. By transferring loan, you can get many discounts, such as no processing fee along with low-interest rates.

j. You need to pay a 1% fee of your loan to your new lender.

When Should You Go For A Home Loan Balance Transfer?

If you are paying a lot of interest on the home loan, then start looking for alternatives. Picking the right time to transfer your funds is also very important. Try searching for a bank giving a lesser interest rate with maximum benefits. 

If you opt to transfer the funds after the repayment of most of the funds, this might not be a better choice. But if you have a lot of years for the completion of the loan, then even a slight change in the interest rate helps you save massive amounts. 

What Can Simplify Your Transfer Of Bank Account?

• A decent track record of the payment up to 12 to 18 months can help you get lower EMI.
• A good credit score.
• Lower interest rates can help you decide which bank is to be chosen.
• All the remaining payments will be made to the new banks. Hence, you can negotiate the interest rates and EMI amount with the new bank.
• If all the required documents are ready, then it will simplify the process to a great extent.

Eligibility Criteria For Bank Loan Transfer

Bank loan transfer depends upon the individual financial status. It is calculated for each individual, and further installments also depend on the same.

Factors that are taken into consideration while calculations for EMI are: – 

a. Annual or Monthly income

b. Savings and credit history

c. Source of income

d. Work experience

e. Qualifications

f. Age

g. Probability of customer to continue in the same occupation

h. Number of dependents

Some Other Eligibility Criteria Are: –

i.  You should have a home loan from any other bank.

j.  The condition applied before transferring of home loan is that you should fill 6 to 12 EMI’s of your previous availed loan. But, in some banks, they accept without even paying 6 to 12 EMI’s of your previous home loan.

k. No default payments should be present of the preceding bank.

l. A new lender will select your under-construction property as security for a home loan. But in case of a new property without registration, it will not be accepted for giving loans.

m. Even for the proposed property, registration is compulsory.

n. You must be of 21 to 61 years and a certified Indian citizen.

o. You must have a stable income so that you can return the loan.

p. Some banks also demand the lowest gross family income certificate.

Documents Required For Home Loan Balance Transfer

Some of the standard documents requested by all the banks are: 

1. Age proof: Any of Passport, Voter ID, Aadhar Card, Driving License along with address proof.

2. Proof of Income: Last 3 months salary slips, last 6-month bank statements, latest form 16, and IT returns.

3. Educational Qualifications Proof

4. Signature Proof And Identity Proof

5.Other documents: Employee contract, last 6 months bank statement showing repayment of ongoing loans, Cheque for processing Fee favoring new bank.

Consideration While Transferring Home Loan

You need to consider some factors before you transfer your home loans. This is a crucial factor that may help you save loads of money from getting wasted in interest or other charges.

Just because the current interest rate is lower than the previous loan rates, this does not mean that it will be more beneficial to you.

The factors to be taken into consideration are: –

1. Time Spent: 

Look at the amount of time you have paid EMIs for. If the time elapsed is relatively high and the remaining amount is quite low. Then it does not make sense for you to transfer the loan in the other bank, as the charges incurred may force you to pay amounts higher than the original stipulated amount.

2. Teaser Loan Rate:

There are many banks which lower their rate just for a few months and then increase substantially. This is done to increase more customers so that customers change their banks for a home loan. So, look for the history and rating of the bank, before opting for one of them.

3. Processing Fees:

When you transfer your home loans, the new bank/lender attracts processing fees. This may usually range from .5 to 1% of the total remaining amount.

How Does A Home Loan Balance Transfer Work?

Home loan transfer ideally takes place in the following steps: 

1. Carrying out personal analysis to see where it is profitable for you to transfer the loans.

2. Getting A NOC From Bank

After you decide to transfer your loan account balance to another bank, then you need to get a Non-objection certificate from the previous bank.

Along with the NOC, you also need to get certain documents from the banks such as a foreclosure letter, proof of past EMI history, copy of loan agreement papers with the previous bank.

It takes a long time for the documents to be given to you, so make sure you write an application for the same at the earliest. 

3. Apply For Balance Transfer In The New Bank

After you get all the required documents from the bank, you can proceed to apply to loan in the new bank.

The application steps may differ, but the basic application procedure is as given: – 

• Enter your personal and employment details in the form.
• Calculating the amount that you can borrow for your balance transfer.
• Mention requirement and property details.
• Unlock your final loan eligibility amount.
• Verification and distribution of the money in your account.

4. Settlement Of Your New Loan With The Loan Account

After you complete the application process, the next loan provider will evaluate your application and then approve it.

Once your application is reviewed and approved by the bank. The loan amount will get credited to your bank account.

You can pay out the complete amount with the new amount credited in your bank. 

5. Repayment Of Your New Loan

After the balance is transferred, it does not mean that the remaining amount is waived off. You still need to pay money to the new bank.

Your EMI amount and frequency are set up, keeping your financial status in mind, mostly the loan repayment will not be a bigger issue.

This repayment will be fully customized, keeping your financial ability in the mind. You will be given better service and a better rate of interest, which might help you save loads of money. 

Charges Associated Transfer With A Home Loan Balance 

Different banks have different charges for transferring home loans. Charges which need to pay during the transfer are: 

a. Foreclosure Charges –

For floating rate home loan, a bank is not permitted to take any charges to foreclose a loan. For a fixed rate home loan, you need to pay a demanded charge by your existing bank.

b. Processing Fees –

There are available discount offers from time to time by different banks. You can be careful and keep your eyes on different offers and updates.

c. Title Deed Charges-

In many states like Mumbai, Pune, Maharashtra, Chennai, Tamil Nadu, Bangalore, Karnataka, Hyderabad, Telangana, and Rajasthan, the interest rate of 0.2 % to 0.5% on the loans is paid as Memorandum of deposit of title deeds. In places like Delhi, Gurgaon, Haryana, Noida, Uttar Pradesh, no stamp duty is paid by the customers.

d. Other Incidental Charges –

In Mumbai, Pune, and other parts of Maharashtra, SRO registration is charged for incidental charges.

Types Of Home Loans

1. Home Purchase Loans:

This type of loan is taken to buy land, flat, bungalow, plot. The maximum amount given by the banks in House purchase is 90% of the current market value of the home.

Eligibility:

i. Age 18 to 65

ii. Minimum experience of 2 years for salaried person and 5 years for self-employed.

iii. Minimum Credit Score of 750

Documents: 

These are the basic documents required, which may change from bank to bank: –

• Age Proof
• Address Proof
• Income Proof
• Identification Proof
• Existing Loan Documents
• Documents of Property to be Purchased

2. Home Construction Loans

Home Construction Loan is given to individuals owning land and wanting to construct a house on the same.

Eligibility

i. Age 18 to 65

ii. Minimum experience of 1 year for salaried persons

iii. Minimum Credit Score of 700

Documents: 

These are the basic documents required, which may change from bank to bank: –

• Age Proof
• Address Proof
• Income Proof
• Identification Proof
• Existing Loan Documents
• Documents of Property

3. Home Improvement Loans

These are low-interest loans, which can be availed to repair, renovate, or refurbish your house.

Eligibility:

i. Age 18 to 65

ii. No experience required

Documents: 

These are the basic documents required, which may change from bank to bank: –

• Age Proof
• Address Proof
• Income Proof
• Identification Proof
• Existing Loan Documents
• Property title deeds
• Renovation quotation

4.  Home Extension Loan

This Loan is taken when the customer wants to add more space to his house, Like adding a room or a floor.

Eligibility:

i. Age 18 to 65

ii. No experience is required

Documents: 

These are the basic documents required which may change from bank to bank: –

• Age Proof
• Address Proof
• Income Proof
• Identification Proof

5. Land Purchase Loans

This type of loan can be availed to buy a plot of land for construction or investment purpose.

Eligibility:

i. Age 18 to 65

ii. No experience required

Documents: 

These are the basic documents required, which may change from bank to bank: –

• Age Proof
• Address Proof
• Income Proof
• Identification Proof
• Land documents
• Pre-existing loan documents

6. NRI Home Loans

NRIs also have the facility to get home loans. The condition for availing loan varies from every bank to bank.

Eligibility:

i. Age 18 to 65

ii. No experience required

Documents Required for NRI Home Loans: 

However, the requirements may change from provider to provider. General documents that may be required are: –

• Passport and work visa copy
• Proof of valid work permit
• Copy of employment contract
• Current overseas residential proof
• Salary slips of the user for the past three months
• Salary account statement for the past six months
• A general power of attorne
• Last year ITR except for NRIsliving Middle East nations or Merchant Navy Employees.
• Property papers

Selected Bank With Details For Their Home Loan Balance Transfer

1. State Bank Of India

i. With 6.95% as transfer rates for a home loan.

ii. Starting Rs. 4,000 to Rs. 17,400 as a processing fee of loan transfer.

iii. Lowest EMI for Rs. 662 on per lakh for 30 years.

2. HDFC

i. With 6.95% as transfer rates for a home loan.

ii. Starting Rs.10,000 as a processing fee of loan transfer.

iii. Lowest EMI for Rs. 662 on per lakh for 30 years.

3. Citibank

i.  With 6.95% as transfer rates for a home loan.

ii. You don’t have to pay any processing fee for loan transfer.

iii.  Lowest EMI for 25 years.

4. Bank Of Baroda

i.  With 7.00% as transfer rates for a home loan.

ii. Starting Rs.10,030 as a processing fee of loan transfer.

iii. Lowest EMI for Rs. 665 on per lakh for 30 years.

5. ICICI Bank

i. With 7.10% as transfer rates for a home loan.

ii. Starting 0.50% as a processing fee of loan transfer.

iii. Lowest EMI for Rs. 672 on per lakh for 30 years.

6. Axis Bank

i. With 7.35% as transfer rates for a home loan.

ii. Ultimate of Rs. 10,000 as a processing fee of loan transfer.

iii. Lowest EMI for Rs. 689 on per lakh for 30 years.

7.  PNB Housing Finance

i. With 8.60% as transfer rates for a home loan.

ii. 1.00% as a processing fee of loan transfer.

iii. Lowest EMI for Rs.776 on per lakh for 30 years.

8.  LIC Housing Finance

i. With 6.90% as transfer rates for a home loan.

ii. 0.25% as a processing fee of loan transfer.

iii. Lowest EMI for Rs. 659 on per lakh for 30 years.

9. India Bulls

i. With 9.25% as transfer rates for a home loan.

ii. Starting Rs.7,500 as a processing fee of loan transfer.

iii. Lowest EMI for Rs.856 on per lakh for 25 years.

10. DBS Bank

i. With 7.70% as transfer rates for a home loan.

ii. Ultimate of Rs.10,000 as a processing fee of loan transfer.

iii. Lowest EMI for Rs.818 on per lakh for 20 years.

11. DHFL

i. With 9.50% as transfer rates for a home loan.

ii. Starting Rs. 2,500 to Rs. 20,00 as a processing fee of loan transfer.

iii. Lowest EMI for Rs. 841 on per lakh for 30 years.

12. Kotak Bank

i. With 8.60% as transfer rates for a home loan.

ii. Ultimate of Rs. 10,000 as a processing fee of loan transfer.

iii. Lowest EMI of Rs.874 on per lakh for 20 years.

13. Corporation Bank

i.  With 8.35% as transfer rates for a home loan.

ii.Ultimate of Rs. 50,000 as a processing fee of loan transfer.

iii. Lowest EMI for Rs.758 on per lakh for 30 years.

14. HSBC Bank

i.  With 8.65% as transfer rates for a home loan.

ii.  By 1.00% and ultimate of Rs.10,000 as a processing fee of loan transfer.

iii. Lowest EMI of Rs.815 on per lakh for 25 years.

15.  Jammu and Kashmir Bank

i. With 7.70% as transfer rates for a home loan.

ii. Starting Rs.500 to Rs. 10,000 as a processing fee of loan transfer.

iii. Lowest EMI of Rs.938 on per lakh for 15 years.

16. Lakshmi Vilas Bank

i. With 9.70% as transfer rates for a home loan.

ii.  Starting Rs. 10,000 to Rs. 20,000 as a processing fee of loan transfer.

iii. Lowest EMI of Rs.945 on per lakh for 20 years.

17. RBI Bank

i. With 10.45% as transfer rates for a home loan.

ii. Starting Rs. 5,000 to Rs. 15,000 as a processing fee of loan transfer.

iii. Lowest EMI of Rs. 941 on per lakh for 25 years.

18. LT Housing Finance 

i.  With 9.90% as transfer rates for a home loan.

ii. Starting at Rs.4,999 and 2.00% as a processing fee of loan transfer.

iii. Lowest EMI of Rs.870 on per lakh for 30 years.

19. TATA Capital

i. With 9.05% as transfer rates for a home loan.

ii. You need to give 0.50% as a processing fee of loan transfer.

iii. Lowest EMI of Rs. 809 on per lakh for 30 years.

20. Bank of Maharashtra

i.  With 8.20% as transfer rates for a home loan.

ii. You need to provide 0.50% as a processing fee of loan transfer.

iii. Lowest EMI of Rs.748 on per lakh for 30 years.

21 . Edelweiss

i.  With 10.50% as transfer rates for a home loan.

ii. You need to provide 0.25% as a processing fee of loan transfer.

iii. Lowest EMI of Rs.944 on per lakh for 25 years.

22. IDBI Bank

i. With 8.25% as transfer rates for a home loan.

ii. You need to provide 0.50% and starting from Rs. 2500 as a processing fee of loan transfer.

iii. Lowest EMI of Rs. 751 on per lakh for 30 years.

23. Karnataka Bank

i. With 8.55% as transfer rates for a home loan.

ii. You need to provide 0.25% and starting at Rs. 250 as a processing fee of loan transfer.

iii. Lowest EMI of Rs. 772 on per lakh for 30 years.

24. Reliance Capital

i. With 10.00% as transfer rates for a home loan.

ii. You need to provide 1.00% and starting at Rs. 3,000 to Rs. 6,500 as a processing fee of loan transfer.

iii. Lowest EMI of Rs.878 on per lakh for 30 years.

25. Canara Bank

i.  With 8.05% as transfer rates for a home loan.

ii. You need to provide 0.56% and starting of Rs.1,500 to Rs.10,000 as a processing fee of loan transfer.

iii. Lowest EMI of Rs.737 on per lakh for 30 years.

26. DCB Bank

i. With 10.34% as transfer rates for a home loan.

ii. You need to provide 2.00% and starting of Rs.5,000 as a processing fee of loan transfer.

iii. Lowest EMI of Rs.981 on per lakh for 20 years.

27. Federal Bank

i. With 8.35% as transfer rates for a home loan.

ii. You need to provide 0.50% and starting of Rs. 3,000 to Rs.7,500 as a processing fee of loan transfer.

iii. Lowest EMI of Rs.758 on per lakh for 30 years.

28. Indian Bank

i.  With 7.55% as transfer rates for a home loan, you need to provide 0.23% and the ultimate of Rs. 20,381 as a processing fee of loan transfer.

ii. Lowest EMI of Rs. 809 on per lakh for 20 years.

29. OBC Bank

i.  With 8.00% as transfer rates for a home loan.

ii. You need to provide 0.50% and the ultimate of Rs.20,00 as a processing fee of loan transfer.

iii. Lowest EMI of Rs.772 on per lakh for 25 years.

30. Central Bank Of India 

i. With 7.25% as transfer rates for a home loan.

ii. You need to provide 0.50% and the ultimate of Rs.20,000 as a processing fee of loan transfer.

iii. Lowest EMI of Rs. 687 on per lakh for 30 years.

Top Banks With Best Interest Rate For Home Loan Bank Transfer

• SBI home loan transfer with 8.75% interest.
• HDFC home loan transfer with 8.75% interest.
• ICICI home loan transfer with 9.05% interest.
• Axis bank home loan transfer with 8.90% interest.
• PNB housing home loan transfer with 9.10 interest.
• Bank of Baroda with 8.65% interest.
• Citibank home loan transfer with 8.80% interest.
• DBS bank home loan transfer with 9.65% interest.
• Kotak bank home loan transfer with 8.90% interest.
• PNB home loan balance with 8.65% interest.

Processing Fees By Famous Banks

• SBI: -up to .5% Min 1000Rs to Max 10,000Rs + taxes.
• HDFC: – up to .5% Min 3000Rs + applicable taxes.
• ICICI: – up to .5% Min 5000Rs to Max 10,000Rs + taxes.
• Axis: – up to 1% Min 10000Rs + taxes.
• PNB housing finance: – up to 1% Min 10000Rs + taxes.
• LIC housing Finance: – up to .5%+ taxes
• India bulls Housing Finance: – Min 1000Rs to Max 10,000Rs + taxes.
• DHFL: – up to .5% Min 2500Rs to Max 20,000Rs + taxes.
• YES bank: – up to .5% Max 10,000Rs + taxes.
• Citibank: – up to .5% Max 10,000Rs + taxes.

Advantages Of Home Loan Balance Transfer

• Home loan balance transfer will give you a lower interest rate for the same home loan than in the previous bank. In the long term, even a small change in the interest rate during home loan balance transfer can help you save lots of money.
• After you transfer the home loan to another bank, then you have to pay a lesser amount of EMI, and the EMI amount will be customized according to your financial conditions.
• Apart from lower interest, lending institutions also provide you with better service and better offers in the future.
• While you are being approved for the home loan balance transfer, you can also customize your repayment strategies, i.e., your EMI amount.
• As you apply for the home loan balance transfer, your credit score is most likely to go up. Hence, it becomes helpful while applying for another loan or for a credit card.
• A top-up loan is a facility that comes with a balance transfer. A top-up loan can be taken over the home loan. Taking a top-up loan becomes very easy after a balance transfer. Generally, up to 25% of the principal amount can be taken as a top-up loan.

Disadvantages Of Home Loan Balance Transfer

• You should not transfer home loan just because the interest rate is low, analyze your current financial situations, time remaining for completion of repayments, etc because you may give away more money than you were expected to give.
• There are many banks which lower their rate just for a few months and then increase substantially. This is done to increase more customers so that they transfer their home loans.
• You need a Non-objection certificate from your previous lender to sanction your loan with the next banks. Banks hesitate to give the certificate; hence it can be a headache.
• As you change the bank, the terms and conditions change, and you should be aware of each and every small point to avoid yourself from any difficulty in the future.
• The banks collect hefty fees and charges for transferring your home loan, and if the remaining time is less, it is not worthy.
• You need to go again through the whole procedure of legal checking of the documents, credit approval, etc. You will be sanctioned with a loan only when you meet all their terms and conditions.

Is It Advisable To Transfer Your Home Loan?

Home loan transfer has got its advantages and disadvantages. The best thing you can do is analyze your loan and financial situations or consult a financial advisor.

Calculate how will the bank transfer help you save money. Transferring your loan with a little time remaining does not make sense, as you may lose more than saving. See what benefits are being offered by the bank, check if you can negotiate with your current bank to lower the interest rate or get similar benefits in other banks.

If you follow all these steps and you are still firm on the fact that transferring the home loan will save you money, then without any hesitation, go-ahead.

Case Study On Home Loan BalanceTransfer

Let’s Consider,

Mr. Swaraj takes a home loan of INR 50 lakhs from SBI at a 10% rate of interest for a time period of 15 years.

According to the current rate, he will have to pay interest of about 7.5 lakhs in 15 years.

However, after a year, he finds out that the HDFC bank is giving out loans at 8% per annum.

So, according to the current rate for 14 years, he will have to pay 5,60,000Rs as interest approximately.

So, if Swaraj applies and if his loan gets approved, he will roughly have the saving of about 1.7lakhs (excluding all the processing fees).

In such cases, it is beneficial for customers to transfer their home loan balance.

Before deciding to transfer your home loan, We will advise you to consult a financial advisor. He will first completely analyze your financial status. The transfer will help you save money, and he could even suggest some better alternatives than what you think were present.

Transferring your home loan should only be profitable. Hence we are repeating this, again and again, to be careful and look for the best option you can have. 

Frequently Asked Questions

Final Talk

Suppose you see home loan at a better rate than what you have got, never hurry to for home loan balance transfer. You should analyze your current loan status and then look for how the home loan transfer will benefit you.

It is an amazing facility, but you need to be careful while choosing a specific bank. You also have to maintain your credit score to be eligible to transfer your loan. If you transfer your home loan after all the calculations and analysis, then it can save you lakhs of money.