What Is a Home Loan Balance Transfer?

A home loan balance transfer allows you to switch your current housing loan with another bank or financial institution. This transfer generally is done when another lender provides a better ROI on home loans. You may also switch if you are unhappy with your lender’s customer care services, and the features of your home loan EMI. This option is also called refinancing, and there are a few simple steps involved before you are allowed to switch lenders.

First, let us understand how a home loan balance transfer can save you a substantial amount of money annually. Imagine you have availed a home loan at 10% with a tenure of 15 years, wherein Rs. 20 lakhs remains the outstanding principal amount. Now you find out that another lender is offering the same loan at 9% ROI for the same tenure. If you decide to switch to them, you will save Rs. 14,484/- annually and Rs. 2,17,260/- in 15 years. 

1. How to Avail Home Loan Balance Transfer

Step 1 – Use a simple online tool such as the home loan calculator to figure out your home loan eligibility, EMI payable, and the corresponding ROI available to you. If it is lower than your current ROI, proceed to the next step.

Step 2 – Submit an application requesting a balance transfer to your existing lender.

Step 3 – The lender will then provide you with a No Objection Certificate (NOC), a foreclosure letter, a list of property documents (LOD), and your EMI history till date.

Step 4 – Take these documents to the new lender and apply for a new home loan. They will verify your documents and assess your financial history and eligibility. If all your documents are in place and your EMI history doesn’t raise any red flags, your loan will be sanctioned smoothly.

Step 5 – After sanctioning your loan at a lower rate of interest, the new lender will provide your old lender with a check for the outstanding loan amount. After which, your old lender will hand over a complete set of your loan documents to your new lender, thus completing the process. 

2. Eligibility Criteria for Home Loan Balance Transfer

To avail a home loan balance transfer, you must meet the following eligibility criteria –

• Your property must not be under construction or major renovation.
• It should be in your possession or already occupied.
• You must have already paid a minimum of 12 EMIs.
• Your home loan EMI dues must be cleared with your previous lender before switching.

3. Benefits of Home Loan Balance Transfer

• A home loan balance transfer can lower your ROIs, thus reducing your EMIs for the same tenure.
• Your credit score can go up by switching to a bigger and better lender.
• You can use it to optimise your home loan tenure – make it shorter.

A home loan balance transfer is only recommended and profitable when the new lender has comparatively lower interest rates to offer. Well, the home loan interest rates offered by Tata Capital are among the lowest in the industry, starting at just 9.05%! By availing a balance transfer loan with us, you will enjoy lower monthly EMIs. We suggest you use our home loan EMI calculator to optimise your EMI amount. For more information, you can also give us a call or visit us at your convenience.