Buying a home is one of the most significant accomplishments in an individual's lifetime. Given the considerable financial commitment to buying a house, securing financial assistance through home loans is absolutely necessary.
The terms may not always align with your preferences when obtaining a home loan from a bank or financial institution. In such cases, rather than sticking with unfavourable terms, you can consider a home loan balance transfer.
But what is a home loan balance transfer, and how can you opt for it? Let's find out.
What is the Home Loan Balance Transfer?
A home loan transfer process is a service that enables you to move your remaining loan amount from your current lender to a new one. This shift can often happen when you find a lender offering a more favourable interest rate and improved terms and conditions.
Here are the steps you have to follow to opt for a home balance transfer.
How to transfer my home loan?
Here is a simplified 7-step home loan balance transfer process that you need to follow:
1. Finalise your new lender
Find out your prospective lenders who are offering you better interest rates. Compare interest rates offered by various lenders, study their terms and conditions and select the most suitable lender.
2. Apply for a loan transfer with your new lender
You can apply for a transfer of your home loan to a new bank or lender in the following ways:
- Visit the financial institution’s website and review all terms and conditions. If you wish to apply with Axis Bank, you can visit here.
- Fill in all required details about your existing loan, lender, and property.
- Upon submission, you may receive a loan offer.
- If you're satisfied with the offer, pay the processing fee and other charges.
- Upload income proof, demographic documents, and property documents and wait for approval.
3. Contact your existing lender
The next step is to contact your existing lender and inform them about your decision to transfer the loan amount to a new lender.
4. Obtain documents from your lender
You must obtain all important documents your existing lender holds, like property papers and land deeds.
5. Obtain a consent letter
You are required to obtain a consent letter from your existing lender. The letter should mention your outstanding loan amount and property details.
6. Foreclosure of your loan account
Apply for foreclosure of your existing loan account. The new lender will pay off the outstanding loan amount after receiving a consent letter from your existing financial institution. After this, the new lender will possess your property documents and the old account will be permanently closed.
7. Sign a new loan agreement
You must sign a fresh loan agreement with the new lender. All terms and conditions, including interest rate, repayment tenure, and outstanding loan amount, must be mentioned in the agreement.
Also Read: Navigating the Home Loan process: 6 key considerations
Documents required for a home loan balance transfer
To proceed with your Home loan balance transfer application, you will need to provide the following documents:
Proof of Identity, Age, and Address
- Valid Passport
- Voter ID Card
- Aadhaar Card
- PAN card
- Valid Driving Licence
Proof of Income
Salaried
- Salary Slips/ Bank Statements/ Form-16
- Salary Certificate (for cash salaried cases)
Self-Employed
- IT Returns and Financial Statements of the last three years
- Informal Income Documents
Other Documents
- Application form with photograph duly signed
- Processing fee cheque
- Proof of business existence
- The last six months' bank statements
Property related documents
- A document issued by the current lender on their official letterhead with details of property documents in their possession.
- A recent statement from the current financial institution, provided on their official letterhead, indicates the outstanding loan balance.
- Copies of the property documents in question.
Also Read: Know the advantages of a Home Loan Transfer
Conclusion
Choosing alternatives that provide you with maximum value for your money is always advisable. Hence, if a bank can service your loan at cheaper interest rates, it is advisable to accept it.
Before entering into the procedure to switch home loans, assess the various fees associated with the transfer, including foreclosure charges, processing fees, and any other costs levied by both the existing and new lenders.
If you have found a lender offering you lower interest rates, simply follow the process mentioned above for the balance transfer of a home loan and move to a bank that fits your loan requirements.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
