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How a Home Loan Balance Transfer Works?

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  • What is Home Loan Balance Transfer?

  • Facts About Home Loan Balance Transfer

  • Benefits of a Home Loan Balance Transfer

Have you been paying high Equated Monthly Instalments (EMIs) on your home loan? Are you finding it difficult to keep up with your savings? Has servicing your home loan made it impossible to cater to all your living expenses?

There’s a way to ensure that you can fully cater to your daily needs, save more than before, and have enough left to cover next month’s EMI. Opting for a home loan balance transfer is a smart way to get a reduced interest rate because it allows you to pay fewer EMIs. 

Before embarking on a balance transfer of your home loan, you should know what a home loan balance transfer means, benefits, and the process of application, before you can make an informed decision to avail of this benefit.

What is a Home Loan Balance Transfer?

A home loan balance transfer is a procedure that lets you enjoy a low-interest rate offered by a different lender. All you need to do is request to switch your home loan to a new lender. By doing so, you move the outstanding loan amount to the new lender, and they get paid the remaining EMIs till the tenor ends. 

A home loan balance transfer is a procedure that lets you enjoy a low-interest rate offered by a different lender. All you need to do is request to switch your home loan to a new lender. By doing so, you move the outstanding loan amount to the new lender, and they get paid the remaining EMIs till the tenor ends. 

You should only consider a home loan balance transfer after paying up to 6 months of EMIs without a default. Some lenders require that you pay up to 12 months of EMIs.

Facts About the Home Loan Balance Transfer Feature

Below are the features of a home loan balance transfer. 

  • It lets you move the remaining loan balance to a new lender who offers better loan terms and benefits. 
  • The transfer costs a fee that's equal to 1% of the outstanding loan amount.
  • The application process is similar to that of a home loan. 
  • To qualify for a balance transfer, you must have paid EMIs to the current lender for some time. 
  • Upon completion of the transfer, you now owe the new lender the loan amount and the transfer fees. You cease to owe the previous lender.

Benefits of a Home Loan Balance Transfer

Asides from enjoying a reduced interest rate, there are other things that a balance transfer offers you. Read on to find them listed below: 

  • You get to pay low EMIs till the loan tenor ends.
  • You enjoy the exclusive discounts and other perks that your new lender offers. 
  • You can receive a large top-up amount.
  • An adaptable loan tenor. 
  • If you have a floating interest rate, you will pay no charge to foreclose the loan. 

Eligibility Criteria for a Home Loan Balance Transfer

Before applying, you should know the home loan balance transfer rules. These rules help determine whether you qualify or not. They are listed below: 

  • You must be a salary earner or self-employed individual with a record showing that you have paid the EMIs on your home loan to date. 
  • You must be an Indian citizen aged 23 to 62 years. If you are self-employed, the age limit is 65.  
  • You must ensure that you have a strong credit score before applying for a balance transfer of your home loan. 
  • For salary earners, you must have been employed by your current company for at least 2 years.

How to Calculate Savings on a Home Loan Balance Transfer

Transferring your home loan to a new lender enables you to save money. Below are the factors that determine how much you can save: 

  • The loan amount you have paid to date. 
  • The principal amount of your remaining loan amount   
  • The current home EMI
  • The remaining months of the loan tenor
  • The new lender’s interest rate

Documents Required for a Home Loan Balance Transfer

Here’s a list of the documents you need to process a balance transfer of your home loan. 

  • Proof of identity and address 
  • The documents submitted to your existing lender
  • Salary slips of up to 3 months
  • Bank account statements of up to 6 months
  • f you are self-employed, you will provide a balance sheet and a profit and loss account statement dating back to three years 

How to Apply for a Home Loan Balance Transfer

Here is a step-by-step process that’ll guide you during a home loan balance transfer application. 

  • Visit the website of the new lender to know their requirements for a home loan balance transfer.   
  • Fill out the application form by providing the required details. 
  • Submit the necessary documents for the application. If you have not retrieved them from the current lender, we advise you to do so.
  • Get a consenting letter from the current lender. 
  • Once you send this to the new lender, the new lender pays the outstanding amount to the existing lender. 
  • The existing lender issues a foreclosure letter for a home loan transfer. It symbolizes the closure of the loan account. 
  • You begin paying the remaining EMIs to the new lender. 

Make the Switch for Favourable Terms

When you transfer your home loan to Bajaj Housing Finance, we promise you an extra top-up plus zero end-use restrictions, low-interest rates, and many more benefits. 

You can utilize our Home Loan Balance Transfer Calculator to get accurate information instantly. Click here to begin paying less now. 

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