Balance Transfer / Debt Consolidation
Overview
Home Loan Transfer simply refers to the process of transferring your home loan from existing bank to a new bank which offers the loan at lowest interest rates. Home loans are long tenure loans of up to 30 years and hence, you are bound to spend a large amount of your income in servicing it. You should seriously consider transferring your home loan to another bank, if you feel that interest rate and EMI you are paying on your existing loan is higher than the lowest rate and lowest EMI offers in the market.
Home loans are long tenure loans of up to 30 years and hence, you are bound to spend a large amount of your income in servicing it. Home loan interest rates matters as more than 50% of your home loan EMI component is loan interest amount you pay to the bank during the loan tenure. The current interest rates on home loan ranges from 6.75% to 12.15% with a lowest EMI of ₹ 655 per lakh. You should seriously consider transferring your home loan to another bank, if you feel that interest rate and EMI you are paying on your existing loan is higher than the lowest rate and lowest EMI offers in the market.
Ideally, the benefit of home loan transfer is in the initial 4 to 5 years of loan as you pay the highest interest component in the initial years. Loan transfer in the mid or end of the tenure can work against you financially as you had already paid the higher interest part to the lender. So, before you decide to opt for balance transfer, do a thorough analysis of all savings and costs associated with the transfer of loan
Features of Balance Transfer
Home Loan Transfer to SBI, ICICI, HDFC, Axis Bank, PNB Housing
Home Loan Balance Transfer
RBI keeps Repo Rate unchanged at 4%
| Interest Rate | 6.85% Onwards | |
| Processing Fees | NIL to upto 1% | |
| Loan Tenure | 5 to 30 yrs | 691 |
| Bank of Baroda | Upto 30 years | |
| Lowest EMI per ₹ Lakh | 655 |
- Home loan balance transfer can be availed at interest rates starting from 6.75% along with special offers for home loan top up, home credit facility and NIL processing fees. Check Best Offers
- If you are paying an EMI which is significantly more than ₹ 655 per lakh of loan amount, you should transfer your loan to another bank.
Apply for Home Loan @ 6.75%
Home Loan Dec 2020
Compare Home Loan Transfer Rates of all Banks
| Bank | Home Loan Transfer Rates | Loan Transfer Processing Fees | Lowest EMI Per Lakh |
|---|---|---|---|
| SBI Home Loan Transfer | 6.95% | 0.20% Min 4,000 - Max 17,400 |
662 for 30 Years |
| Axis Bank | 6.90% | Max 10,000 | 659 for 30 Years |
| HDFC Home Loan Transfer | 6.90% | 0.25% Min 5,000 | 659 for 30 Years |
| ICICI Bank | 7.10% | 0.50% | 672 for 30 Years |
Home Loan Transfer
Home loans are long tenure loans of up to 30 years and hence, you are bound to spend a large amount of your income in servicing it. Home loan interest rates matters as more than 50% of your home loan EMI component is loan interest amount you pay to the bank during the loan tenure. The current interest rates on home loan ranges from 6.75% to 12.15% with a lowest EMI of ₹ 655 per lakh. You should seriously consider transferring your home loan to another bank, if you feel that interest rate and EMI you are paying on your existing loan is higher than the lowest rate and lowest EMI offers in the market.
Ideally, the benefit of home loan transfer is in the initial 4 to 5 years of loan as you pay the highest interest component in the initial years. Loan transfer in the mid or end of the tenure can work against you financially as you had already paid the higher interest part to the lender. So, before you decide to opt for balance transfer, do a thorough analysis of all savings and costs associated with the transfer of loan
What are the benefits of transferring home loan?
- Reduction in interest rate from high rate to as low as 6.75% per annum.
- Reduction in monthly EMI by upto 5% depending upon the rate difference, balance tenure and EMI.
- Option to avail top up loan at same rate as home loan rate (6.75% to 8.8%) subject to eligibility conditions and loan to value ratio.
- Lower interest rates and other discounts like nil processing fee offered by another lender.
- Option to opt for smart saver home credit facility or maxgain facility to save interest
- Balance transfer options available at various banks like SBI, Bank of Baroda, HDFC, ICICI and others
Documents Required for Home Loan Transfer
Additional Documents for Loan Takeover / Transfer
| Salaried | Self Employed | |
|---|---|---|
| Loan statement (loan track) and list of property documents (LOD) in possession of existing lender | yes | yes |
| Last 12 months' statement of bank account from which loan EMI is paid | yes | yes |
Application Form and KYC
| Salaried | Self Employed | |
|---|---|---|
| Application Form with photo and signed by Primary Borrower and Co-borrower(s) | yes | yes |
| Identity Proof of Primary Borrower and Co-borrower(s) | yes | yes |
| Residential Address proof of Primary Borrower and Co-borrower(s) | yes | yes |
| Age Proof of Primary Borrower and Co-borrower(s) | yes | yes |
| Office address – ownership/ lease / rent agreement/ utility bill | yes |
Income Proof
| Salaried | Self Employed | |
|---|---|---|
| Last 3 years’ Form 16, last 6 months salary slip, last 6 months’ bank account statement showing salary credit | yes | |
| Last 3 years ITR (self and business), profit and loss account, balance sheets certified/audited by a CA. Last 12 months bank account statement (self and business) | yes | |
| Certificate and Proof of Business Existence | yes | |
| Business Profile | yes |
Eligibility Criteria for Home Loan Balance transfer
You can opt for home loan balance transfer if you have outstanding home loan in one bank. Basic eligibility criteria are age, income, employment history and loan to value ratio. Other main eligibility factors which are important for refinance home loan -
- Applicant must be running an existing home loan from another lender
- Monthly Income: The net monthly income must be above ₹ 25,000 for both salaried and self-employed.
- Some lenders may require that an applicant should have paid at least 6 to 12 EMI’s on existing loan before opting for balance transfer. However, at times, this condition may be waived and home loan takeover may be possible even if the loan has not run for 6 – 12 months
- There should not be any default in payment of EMI on existing loans
- In the case of under-construction property, the project must be approved with the new lender. Note that balance transfer of home loan on new property whose possession has been handed over but registration has not been done may not be possible
- In case of ready property, registration should have been completed
Home Loan Balance Transfer Process
Follow the below simple steps on how to transfer your loan from bank to another
- Check your current rate and calculate interest savings
- Calculate the estimated cost on account of various fees and charges as given above
- Shortlist new bank that you wish to transfer your loan to; decide if you want top up loan or not Obtain list of property documents deposited with your existing bank (in case this is not available with you already) and foreclosure letter from existing bank
- Apply for loan with new bank with photocopy of property documents as per list of property documents with existing bank
- Obtain sanction letter and execute new loan agreement
- Take disbursement from new bank by way of cheque/ demand draft in favor of existing bank and also deposit the same
- Obtain property documents from old bank and deposit with new bank
Home Loan Transfer Charges
Charges to transfer your home loan can be different depending on your existing bank, the new bank as well as the state of transfer. Key charges for loan transfer include foreclosure charges to be paid to your existing bank, processing fees, title deed charges and other incidental charges. are:
- Foreclosure charges payable to existing bank for take over of fixed rate home loans. In case of floating rate home loans, banks are not allowed to take any fees to foreclose your loan.
- Processing fees on transfer may range from a flat fee ₹ 10,000 to up to 1% of the loan amount. However, banks offer discounts on processing fees from time to time and you must for attractive offers with marketplaces like Sai Ram Financial to get the most suitable loan offer for you.
- MODT (Memorandum of Deposit of Title Deed) charges of 0.2% to 0.5% on mortgage payable in some places including Mumbai, Pune, Maharashtra, Chennai, Tamil Nadu, Bangalore, Karnataka, Hyderabad, Telangana and Rajasthan among others. No such stamp duty is payable in places in Delhi, Gurgaon, Haryana, Noida, Uttar Pradesh
- Incidental charges such as SRO registration payable in Mumbai, Pune and other parts of Maharashtra
FAQs
Is balance transfer a good idea for home loan?
Balance transfer is a good option for home loan borrowers. This is because the transfer of loan to other banks provides the benefit of lower interest charged on loans. In addition to that, balance transfer could even provide top-up loan offers to borrowers on the existing loan offers.
Can home loan be transferred to another person?
Yes, home loan balance can be transferred to another person along with the transfer of ownership. However, for the home loan takeover, the new borrower should be eligible for a home loan and the previous borrower should meet the foreclosure formalities.
Which bank is best for home loan balance transfer?
A number of Banks provide the home loan balance transfer option at varying interest rates. Presently, SBI Home Loan Transfer offers home loan transfer at minimum interest rates starting from 6.75%.
Can I transfer my home loan to another bank after availing the PMAY benefit?
Home loan balance transfer can be availed under PMAY. However, it is possible only for home loans availed after June 17, 2015.
What is home loan take over?
A home loan take over is when a new lender pays over the loan to the previous lender, when the loan borrower plans to switch his home loan balance. The new lender usually charges a takeover fee for paying the outstanding loan amount to the previous lender.