We always get confused while choosing the best insurance that covers our needs. A home insurance policy is one among them. Buying a house for a low cost is a huge deal nowadays, and also we can’t get rid of all the housing expenses in a single payment. So, we have to think a lot while deciding the best policy that covers all our expenses and makes us comfortable with its benefits. Nowadays, many lenders are providing the best policies along with benefits. You need to do a lot of research, and we are here to help you out with this problem of choosing. Decide what benefits you get when you approach a so and so the bank and mainly think of interest rate because it plays a crucial role in EMIs. So think of interest rate at first and later on about the benefits. Go to every lender and research about their policies, and choose the best. In this article, we will discuss the SBI Home Loan Balance Transfer and the benefits of choosing SBI to transfer your loan. Let’s get into it!
What About The SBI Home Loan Balance Transfer?
SBI is one of the leading financial institutions which helped almost every individual with its beneficial schemes. It is the best choice to transfer your loan policy because the interest rate that this bank is providing is very less when compared to others.
It also doesn’t charge on pre-payment money, and also there are no hidden charges. So what are the other benefits that SBI provides? What is the eligibility of an individual to transfer his/her policy? Let’s start our research?
Benefits Of SBI Home Loan Balance Transfer
1. SBI allows an individual to transfer his/her policy from the following banks:
- Scheduled Commercial banks (SCB)
- Private and Foreign banks
- Housing finance companies registered with National Housing Bank (NHB)
- Borrowers are employers in Central/state government and government undertakings.
2. SBI charges an interest rate from 6.90% on the loan amount, with the RBI repo rate unchanged from 4%. This interest rate depends on the job of an individual. If he/she is self-employed, then the interest rate goes by little. It also provided cashback up to Rs.1000/- on the home loan transfer option.
3. SBI does charge on processing fees, but it is 1% of the outstanding loan money. It doesn’t have hidden charges, and also it doesn’t charge on pre-payment of the loan money.
4. SBI charges less interest on the women borrowers when compared to male borrowers. They also give additional benefits to them.
5. Charges are based on a daily reducing balance method. The daily reducing balance method is nothing but calculating the EMI based on the outstanding balance every day. But many customers don’t pay EMIs daily, so it goes with monthly EMI calculation.
6. In SBI home loan balance transfer is available as an overdraft. This means that you can pay pre-payments on your policy, or you can add an extra amount to your policy as a top-up plan. Generally, the money added to your home loan policy goes as a pre-payment to your existing policy.
7. SBI also provides a PMAY subsidy along with home loan transfer. You can also increase your tenure period if interested by reducing your EMI.
8. During this lockdown period, it also provided online sanction facilities to borrowers.
Who Is Eligible For SBI Home Loan Balance Transfer?
The eligibility criteria in SBI Home Loan Balance Transfer for both self-employed and salaried employees are the same.
- The person who is applied for a home loan transfer should be an Indian.
- He/she ages should lie between 18 and 70 years.
- He/she should own a house property.
- The loan amount should be over ₹75 lakhs. Note it is the total loan amount you have taken, not the outstanding amount.
- A person whose policy has more tenure period. It is not a good decision to switch your lender with this less tenure period.
The minimum income for salaried persons should be Rs.10,000 per month, and for self-employed, it should be Rs.16500 per month.
Documents That Are To Be Submitted For SBI Home Loan Balance Transfer
i. Identity Proof
PAN card, Aadhaar card, driver’s license, Voter’s ID card, Passport, employer identity card.
ii. Proof Of Residence
Recent copy of Electricity bill or telephone bill or water bill or piped gas bill, copy of passport, Driving license, Aadhaar card.
Loan application form with required details along with 3 passport size photos.
iv. Property Papers
- NOC from society/Builder.
- Sale registered agreement form.
- Occupancy certificate, Share of certificate only if you live in Maharashtra.
- All old agreements that are related to your property.
- Account statement: Last 6 months bank statements from all the bank accounts held by the applicant.
v. Income Proofs
For Salaried Person
- Salary slip or salary certificate from the last 3 months.
- Copy of Form-16 from the last 2 years or copy of ITR from the last 2 financial years.
For Self-Employed Person
- Business address proofs
- ITR from the last 3 years.
- Balance sheets, profits/loss accounts from the last 3 years.
- Business license details.
- TDS certificate (Form-16A, if applicable)
- Certificate of qualification (for C.A or doctors and other professionals)
- Documents from other banks:
- List of original documents from the existing bank to SBI
- Loan account statements from the past year.
- Sanction letter or No-Objection letter.
- Interim period security.
How Does SBI Charge Interest And Other Fees?
For SBI Home Loan Balance Transfer, SBI charges interest based on the occupation. It gives benefits to women borrowers. Let us check the interest rates and additional fees charged in 2020.
Home Loan As Overdraft (Margin)
Home Loan As Overdraft (Margin)
SBI Top-Up Home Loan Interest Rates
- Repayment period: Maximum repayment period for a home loan is 30 years, including the moratorium period.
Floating Interest Card Rates
For self-employed individuals, a premium of 15 bps is added to the card rate.
A 10 bps premium is added to the card rate for a loan up to Rs0 lakhs if the LTV ratio is >80% &<90%.
For customers who belong to the RG category (4 to 6), a premium of 10 bps is added.
How Can You Save Your Money Through An SBI Home Loan Balance Transfer?
To understand SBI Home Loan Balance Transfer, let us take an example. Suresh has taken a home loan of Rs.20,00,000 with an interest rate of 9%. Then he has to pay an EMI of Rs.21,492 monthly. The total amount he has to pay with interest is Rs.38,68,560.
Then he has seen an advertisement about the SBI home loan balance transfer option with an interest rate of 6.95%. He decided to transfer the outstanding loan amount to SBI. Let’s say he got an extra charge while transferring be Rs.15,000.
Out of all these expenses, he can actually save Rs.6,42,833 when the money is transferred to SBI who charge 6.95% as an interest rate. The outstanding money he has to pay after transferring is Rs.32,25,727, with an EMI of Rs.17,921 after switchover.
Look at the amount that he can actually save when he switches his lender. I think now you have got a complete view of what happens when you switch your lender. The interest rate of SBI I have considered is the starting one. It can rise based on the occupation of a borrower.
Process Of SBI Home Loan Balance Transfer
Step-1: Submit a request letter to your existing lender. The request letter can be either a written one or an application form.
Step-2: Request your existing bank to transfer the required documents to SBI immediately.
Step-3: Wait for No-Objection Letter from the existing bank or money lender. This process usually takes 3 weeks to do.
Step-4: Submit this No-Objection letter to SBI and request them to pay off the previous lender’s foreclosure charges.
Step-5: SBI will verify the No-Objection letter and later sanction it and pay off your dues to your previous bank.
Step-6: Confirmation letter from the previous bank stating that all the settlements are done and there is no issue.
Step-7: After processing all the required procedure previous bank will close your account by canceling all the cheques and statements.
Step-8: You can now continue with SBI and can enjoy your benefits.
Methods To Repay Your Loan Money In SBI
1. Standing Instruction (SI)
In this method, EMI money is get deducted from your account at the end of every month. Like a periodic schedule where you personally don’t have to go to the bank to pay your EMI. At the end of every month, EMI will get automatically debited from your account.
2. Electronic clearing service (ECS)
It is a paperless work and a speedy and effective method. It can be both credit and debit transactions through online mode. Generally, ECS is issued by institutions for paying a huge amount at once. It can be used for salaries, pensions, etc.
3. Post-Dated Cheques (PCD)
This check is issued with a future date, and it can be used for both credit and the debit of money. When you show this PCD, your EMI can be debited before the date in the check. Simply an early repayment of your EMI through this PCD. This works only where the ECS method doesn’t work.
What Benefits Do We Get From Home Loan Transfer?
1. The reduced interest rate on your policy: The outstanding money of your policy is calculated. With less interest rate on the policy, the EMI gets reduced, and you can happily pay off your policy money. This is the main reason, many of us change their home loan from one bank to another with fewer interest rates.
2. Additional policies: You can also get additional benefits like cover for expenses on remodeling and cover the contents present in your house. Sometimes you can also get a personal insurance plan along with your existing policy.
3. When you are a good customer, the bank also gives you top-up plans with the same interest in your remaining policy. The money included in your top-up plan depends on the bank and your premiums history.
4. When you are not satisfied with your lender: when your lender is not negotiating with you, or you are unhappy with the benefits of the lender, then it is the best choice to transfer your policy. First of all, when you decide to transfer your loan money, consult your lender and start to negotiate with him. If he argues with you for changing the policy statements, then choose the other lender.
5. When the total cost of a transfer is balanced: It is not simple to transfer your loan policy from one bank to another. It includes processing charges, consultancy fees, foreclosure charges from your existing lender, and also sometimes lawyer fees to negotiate the disputes while transferring. So, decide to transfer your money only when the decrease in interest rate balances your outgoing money or expenses.
How To Avail Of The Best Home Loan Transfer?
i. Check the interest rate track record: It is advised to check the new lender’s interest rates from the past two or three years. Based on the track record, choose whether to transfer your loan money or not. Ask your new lender about the benchmark rate track record.
ii. Inquiry about the new lender’s services: This check is essential because you have to benefit from the new lender when you transfer your loan money.
iii. Check the benchmark rate: Actually, there are two benchmark rates used one is MCLR, and the other is PLR (prime lending rate). MCLR rate is used in banks, while housing finance companies use the PLR rate. Benchmark rates are just referenced rates that reflect the cost of borrowing money in different markets. To understand this better, let us take an example. A bank has lent money to a particular company at an interest rate set as benchmark value (BM) + 2%. This means that the company has to pay their money back with 2% more interest than the benchmark value. If the benchmark rate is more, then the interest rate will be more. Hence it is advised to choose banks with MCLR rates because MCLR benchmark rates for home loans are more transparent than PLR benchmark rates.
iv. Check if the spread is fixed or not : Generally, the interest rate on floating loans consists of two parts- benchmark rates and spread. We know that the benchmark rate is just a reference rate, and it can vary with time. So we have to look at the spread carefully. Sometimes because of variation in the spread, there is a sudden hike in EMIs in some banks. So choose only banks that fix the spread value, and the change in floating rate is only because of change in benchmark value (BM).
What Is A Home Loan Transfer?
For example, you have taken an insurance policy with less interest rate from some lender or bank or any financial institution. You are thrilled with the benefits that the policy provides, and you don’t have any issue with the lender. But one day, you have seen an advertisement about a home insurance policy with less interest rate than yours.
You suddenly thought to have a transfer of your outstanding loan money from your existing lender. This transfer of loan money from one bank to another or from one lender to another is termed “loan transfer.” You can transfer any type of insurance policy, but home loan transfer is popular among them.