Banks and non-banking finance companies such as Bajaj Finserv make home loan balance transfer a viable option for investors desirous of switching from one lender to another who is offering lower home loan interest rates. Once the new lender approves the home loan transfer process, they pay the outstanding amount to the present lender.
Once the present lender receives the pending amount, they release the property documents and also issue a no dues certificate to the borrower, who then hands them over to the new lender. After completing this process, the borrower has to pay the remaining equated monthly installments to the new lender following their home loan interest rate norms.
In the process of a home loan transfer, the borrower closes his or her present home loan account and opens a new account with the new lender for better benefits such as a lower home loan interest rate, tenure, etc.
Borrowers prefer a balance transfer mainly for a lower home loan interest rate. A reduction in the interest rate leads to smaller EMIs and this increases their monthly savings. The home loan transfer process may also help to reduce the overall tenure of the home loan.
When opting for a home loan transfer, a good track record of payments, good credit scores, and other points may allow the borrower to negotiate better terms and conditions for the new home loan. This may be in the form of a lower home loan rates or better benefits compared to that from the present lender.
The new lender may also offer the borrower a top up loan when he or she opts for home loan balance transfer. This enables the borrower to avail a new loan at a competitive price to pay off other debts or use it for renovating the home. Although the present lender does not offer a top-up loan even if the real estate price or market value of the home goes up, the new lender considers the present market value of the property as a benchmark and therefore, can offer a top-up loan.
The borrower may also get additional benefits such as better customer service, lower EMIs, shorter duration of loan tenure, and other benefits that the present lender may not be offering. Such home loan transfer can even boost the borrower’s credit score rating.
The home loan transfer process is made simple nowadays as all information about the borrower, such as credit score, is available online. This reduces the volume of documentation required for a balance transfer.
Also Read: How to Transfer Home Loan?
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