Balance transfer makes sense when after the repayment of housing loan for a few years you find a lender who is offering you lower interest than your existing one. So by switching to the new lender, you can reduce the amount of your EMI and the interest on the home loan.
However, whether it results in overall saving depends on a few factors. These are explained in brief below.
What are factors to consider when transferring home loan balance?
After making a few timely instalments on housing loan repayment, you increase your credit score over time. So you become eligible for a low-interest rate for the exact home loan requirement. Thus, to reduce your financial burden, you opt for home loan balance transfer to a lender with better terms and interest rates. However, before doing so, keep these factors in mind:
- Lowest interest rate
Since the primary reason for transfer is a lower housing loan interest rate, compare the market and find which financial institution offers the lowest interest rate. Also, try to negotiate for a better offer. This rate is mainly based on factors like the type of property in question, your income profile, credit history and others.
- Overall charges
There are a few charges involved with the transfer of housing loan process, like pre-payment of the old loan, stamp duty charges, processing fee of the new loan, legal or technical fees, etc. So, before the transfer, calculate whether these layers of additional cost are nullifying the advantage of the lower interest cost. If yes, the purpose of this transfer gets void.
- Loan tenor
If you are near the end of settling your house loan, there is no point in transferring the home loan balance. Also, if you plan to sell the property after clearance, then avoid the transfer. However, it would be a great option if you take a top-up loan on the home loan. You can benefit from a top-up loan in many ways. It increases your loan tenor and reduces the interest burden.
Another benefit available with a home loan balance transfer is the pre-approved offers. Lenders provide this facility on secured loans like home loans to reduce the application time of their loyal customers and make the overall process easy. So, if you want to check your pre-approved offer, just provide your name and contact details.
Applying housing loan does not put financial pressure on borrowers if the terms and conditions are correct. So, if you do not have the preferred terms opt for a home loan balance transfer. However, will you be eligible for a home loan balance transfer or not is discussed below.
What is the eligibility for home loan transfer for a salaried individual?
Before transfer you should know everything about home loan balance transfer. However, the major factor to consider is the eligibility quotient. These are:
- Nationality – Indian
- Employment status – You should have at least 3 years of experience
- Age – 28 to 58 years
- Minimum income – Specific to city
- CIBIL score – 750 or higher
- Loan detail – It should suit the financial profile
What are the documents required to avail a home loan?
There are a few documents required for home loan for salaried person and for balance transfer. These are KYC documents (Driving license, passport, voter ID card and Aadhaar card), employee ID card, last two-month salary slip, last three month’s bank account statement, property documents, existing loan documents.
Furthermore, you need to procure the following documents from existing lender if you want to transfer the balance after getting a home loan.
- No Objection Certificate (NOC)
- Letter of consent
- Foreclosure letter
- Property documents
- Home loan statement
- Post-dated cheques
Home loan balance transfer is required when you find that more lenders have entered the market with a better rate after a few repayments of housing loan. Switching to a better lender reduces the EMI and gives you a better interest rate.