Home loan balance transfer is a facility under which you can transfer your existing home loan to another bank or financial institution. Its main objective is to take a loan at a lower interest rate or get better repayment terms, so that your EMI is reduced and you can save lakhs of rupees in the long run. Especially when the interest rate of your current bank is high and some other bank offers cheaper, then this option is beneficial.
When to transfer home loan?
If the interest rate of your existing loan is higher than your new option and the transfer process seems profitable even after deducting the expenses like processing fees, legal fees etc., then home loan transfer should be done. But if the loan tenure is nearing its end or your remaining loan amount is very less, then transfer will not be of much benefit. Also, the transfer can improve the credit score, which helps in getting financial comfort in future.
Process and required documents
For home loan balance transfer, first you have to compare the interest rates, fees, and other terms of the new bank or loan institution. Once you have chosen the best option, obtain the No Objection Certificate (NOC), foreclosure letter, and loan statement from your existing bank. After this, apply to the new bank and start the loan transfer process as per their conditions. The entire process may take around 15-20 days. Important documents include PAN card, Aadhar card, income certificate, bank statement etc.
Top-up Loan
Along with home loan transfer, you can also avail a top-up loan, which comes in handy for additional funding needs like home renovation, wedding, or education expenses. The new bank sanctions the top-up amount as per your eligibility, however processing fees and other charges may apply.
It is important to fully evaluate the transfer costs as processing fees and other expenses may outweigh the savings. Also, check if you can get better terms from your existing bank before transferring. Transfer home loan balance by choosing the right time and condition so that you get the best financial benefits.