Home Loan Transfer Process: Know all the details

Home loan transfer
home loan transfer

A home loan transfer is often done to lower the interest rate burden that you are currently dealing with. Here’s all you need to know about the process.

Home loan balance transfer actually refers to the process of switching or shifting your existing home loan to another lender. In most cases, people undertake this process in order to save money on interest, i.e. the new lender may offer a lower rate of interest or more flexible terms and conditions.

However, you should keep several factors in mind before signing on the dotted line. Sometimes, negotiating with your existing lender for a lower interest rate may also help you accomplish your objective of greater savings on your home loan. It all depends on the circumstances in question.

Rates of home loan transfers as of July, 2020

Here’s taking a closer look at the rates of home loan transfers at leading banks and financial institutions as of July this year:

  • HDFC Ltd- 7.50% per annum
  • SBI (State Bank of India)- 7.35% per annum
  • LIC Housing Finance Limited- 7.40% per annum
  • Axis Bank- 7.75% per annum
  • ICICI Bank- 7.70% per annum
  • Bank of Baroda- 6.85% per annum
  • Bank of Maharashtra- 7.05% per annum
  • Canara Bank- 6.90% per annum
  • Kotak Mahindra Bank- 7.40% per annum
  • Union Bank of India- 7.10% per annum
  • IDFC First Bank- 8% per annum
  • United Bank of India- 8% per annum
  • Federal Bank- 8.15% per annum
  • Dhanalakshmi Bank- 8.25% per annum
  • Karur Vysya Bank- 8.20% per annum
  • Karnataka Bank- 8.35% per annum
  • PNB Housing Finance Limited- 8.85% per annum
  • Standard Chartered Bank- 8.86% per annum
  • Tata Capital- 8.50% per annum

Learning more about transfer of home loan

You can easily calculate whether your home loan transfer will benefit you or not; there are several online calculators available for this purpose as well. You have to enter the basic information including the outstanding loan amount, tenure of your existing loan and the rate of interest. The calculator will help you estimate the savings that you can gain by transferring the balance amount to another lender. The EMI calculation on your home loan transfer will depend on the principal amount of the outstanding loan amount, the present EMI that is paid each month, the present tenure of the outstanding loan in months and the interest rate offered by the new lender.

For example, suppose your outstanding principal amount of the home loan is Rs. 30 lakh and the tenure of the existing home loan can be assumed to be 20 years. The rate of interest from the current lender is 9.5%. In this scenario, if you switch to another lender at a rate of interest of 8.85% for a 20 year tenure, then you will save a whopping Rs. 3,02,613 while the proposed EMI will come down to Rs. 26,703 every month in comparison to Rs. 27,964 paid currently. The EMI savings alone will be Rs. 1,261every month.

How do you execute a home loan transfer?

You will have to follow these steps for speeding up your home loan transfer process:

  • Visit the website of the new lender.
  • Check all applicable terms and conditions along with the rate of interest and the processing charges.
  • If you are happy with what you see, apply online for home loan balance transfer.
  • You will have to fill up the fields given including your property type, name, existing loan tenure, name of the bank and so on.
  • Post completion, you can easily view the loan offering.
  • You will have to pay the fees/charges necessary and upload the documents required.
  • You can then finish the application and await approval from the new lender.

Here are some other aspects that you should know about:

  • You have to get all necessary documents for home loan transfer from your current bank/financial institution.
  • Get the consent letter from your current lender along with the outstanding loan amount.
  • Give these documents to the new bank/financial institution where you wish to transfer the outstanding home loan amount.
  • The new lender will be repaying the due balance to the previous lender accordingly.
  • Your previous loan account will then be closed and all payments will now be made to the new lender.
  • All documents of property will be handed over to the new financial institution upon officially completing the home loan transfer process.

Also Read: 

RBI Rationalises Risk Weightage on Home Loans
Defaulting on home loans
Repo rate cut raises hope for cheaper home loans
Will interest rate subsidy on home loans impact real estate
Difference between home loans for NRIs and Resident Indians

What are the eligibility criteria for a home loan transfer?

You should be between 23-65 years of age and either a self-employed or salaried individual. Resident Indians and NRIs can both apply for home loan balance transfers.

What documents do you need for home loan transfer?

You will require the following documents:

Proof of address
Proof of identity
Salary slips for last 3 months
Documents of the existing home loan
Bank statements for last 6 months
Last 3 years’ balance sheet and profit and loss account statement for self-employed individuals
Passport size photograph

Why should you transfer your home loan?

The rate of interest on the home loan may come down post refinancing of the home loan. Your EMI may come down with the same tenure or your EMI will remain the same while the tenure goes down. This process will lower the overall cost of the home loan. However, take into account processing charges and fees. If the rate of interest and these charges are more affordable than your current loan, you should go ahead with the home loan transfer process.

What is the main difference between home loan balance transfer and home loan?

A home loan is the loan that you get from financial institutions for buying a home or land, constructing a home or simply for renovation of any existing home. Verification and documentation procedures are more extensive and stringent for home loan applications.

Home loan transfer is when you simply switch your existing home loan from one lender to another to get the benefit of lower interest rates and better service/terms. Documentation is lower in this process and it is easily attainable as compared to home loans.

  • Super Quick & Easy
  • Stamped & E-Signed
  • Delivered Directly in Mailbox

Exploring Options for Buying or Renting Property

Looking to buy or rent property
Related Category
  • Current Trends
  • Municipal Corporation
  • property laws
  • Property Registration
Contact Our Real Estate Experts