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Everything You Must Know Before Applying For Home Loan Transfer

  By : , Thane, India       31.8.2019         1 Comments          Phone:9820186703          Mail Now
  Home loan transfer means refinancing your current home loan. It means transferring your existing home loan to another bank in order to enjoy the benefits of lower rates & longer tenure. It helps to save your money on the monthly EMI outgo. A home loan that has completed a minimum of 6 months is eligible for a transfer. <p>

Why Transfer Your Home Loan?

Home loan transfer comes to you with numerous advantages. Few such advantages are:-

1) Opportunity to enjoy lower rate of interest & thus lower your EMI.
2) Avail top-up loan at lower interest rates to fund your immediate requirement of home renovation, wedding, children’s higher education, plot investment, business need, medical expenses, etc.
3) Enjoy longer tenure: Allows you to increase your existing loan tenure.
4) Opportunity to transfer your loan from fixed interest rates to floating rate of interest with no pre payment penalty.

Processing Cost for Home Loan Transfer

Home loan transfer doesn’t come free of cost. You have to pay a price in order to enjoy the benefits of loan transfers. You have to pay all the banking charges in-fresh, once again to the new bank where you wish to transfer your loan. Such charges is the processing fees, administrative & legal cost, disbursement cost of franking & stamp duty along with the BT (balance transfer) draft, etc. In short it means spend extra moneys to make a savings. (Learn more about all cost in our previous blog, ”Don’t Get Fooled!! Must Know All Costs In Home Loan”)

Sometimes you may need to pay additional cost of closure charges to your existing lender bank/NBFC which may choose to charge you with pre-payment penalty on the loan switch-over. Such penalty charges differs from bank to banks/NBFCs and ranges from 1%-3% on the outstanding loan amount. However with RBI’s guidelines the pre & part payment charges has been forfeited. Such charges are applicable only with the loans with fixed rate of interest or it is introduced as a condition in sanction letter in cases with special approvals.

Home Loan Transfer Process: In Brief

1) Banking comparison- Transfer process starts with the self evaluation on transfers with respect to ROI (rate of interest) & transfer charges, time process, etc. Learn how much you can save by studying the difference in the EMIs with new ROI and tenure benefit. (Get Free Quotes From Top Banks)

2) Apply for LOD, Outstanding letter & Repayment Track Record - Once you have planned for loan transfer you need to apply for LOD (List of documents), outstanding letter & repayment track record of your EMIs from the existing lender bank/NBFCs. LOD is the list of all original documents you have submitted with the existing bank & it is provided on their letter head, while outstanding letter is the copy of the current latest outstanding balance on the loan amount. A repayment track record of minimum 18 months – 24 months is required.

These three are the mandatory documents when you process for loan transfers.

3) Document Submission to the new lender Bank/NBFC – Submit your documentation i.e. your KYC- Pan card, Aadhar card & address proofs, your financial documents (ITR, Form 16, salary slips, bank statement) along with new lender’s duly signed form & a copy of LOD, outstanding letter and repayment track record which you have generated from the existing lender bank/NBFC. (Know the entire process of loan application – “Know Step-by-step Process For Home & Mortgage Loan”)

4) Repay Your Existing loan- On the successful application and approval from the new lender bank/NBFC, the new lender bank will take over your loan from the existing lender bank by repaying them with the your outstanding balance on the loan amount.

To Summarize - A home loan transfer is a good option for you if you are charged with higher rate of interest and if you are paying the higher EMIs. You have a freedom to choose among the new lenders that offers you with lower ROI-lower EMIs option and also provides you can with longer loan tenure. But it is always advisable to evaluate the monetary benefits from such transfers enjoyable in the long run. Don’t let the immediate short term gains mislead you. Calculate your total expenditure in transfer compare it with the amount you will be savings by transferring the loan and accordingly make a wise decision.

Banks/NBFCs come with various offers on balance transfers from time to time. The “Zero Processing Fee Offer on transfers” is the frequent announcement from the banks that you should not miss if you are looking for a transfer.

Banks/NBFCs also have a unique product on home loan balance transfer which is called the “Express BT”. Under this product the loan is transferred only on the basis of good track record which is considered for 24 months.

However before transferring your home loan ensures you speak to your existing lender bank/ NBFC to reduce your ROI. They usually don’t want to lose you if you have a good track record of your loan and its repayment. There are chances that they may offer you with lower ROI but it may cost you. Such costs are termed as conversion cost. It is an advisable option since it benefits in saving time, energy, money and unwanted documentation.

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TAGS: Home loan transfer,   home loan,   refinancing current home loan,  


   amit, thane
Reply Posted On :
5 - 9 - 2019

nice blog


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