Frequently Asked Questions
What is home loan balance transfer?
Home loan balance transfer is when you switch your existing home loan, and the entire principal amount that is still unpaid, to another lender for a lower interest rate. The lender that you had originally taken the loan from will receive this unpaid amount, while you continue to repay the loan amount at a new interest rate to the new lender that takes up your loan.
You should first understand home loan balance transfer carefully before opting for the same. It is important that you ascertain the benefits you will receive by way of lower interest rates before you choose a home loan balance transfer scheme. You can apply for home loan transfer online with Bajaj Finserv.
Can you transfer a home loan to another financial institution?
Yes, you can always transfer your existing home loan to another financial institution. People often want to transfer home loans when they find that they are paying a higher rate of interest, as compared to market rates. This takeover of home loans is called home loan balance transfer. It basically involves transferring your unpaid principal amount from one lender to another at a lower rate of interest.
Home loan balance transfer is a great way to reduce your debt in case you find that your present home loan is too expensive. You can use the Bajaj Finserv home loan balance transfer calculator to work out your savings in accordance with the lower interest rate.
As per RBI guidelines, what are the charges levied on a home loan balance transfer?
The RBI home loan balance transfer policy contains information on balance transfer charges that you will have to take into account before transferring your home loan.
A.The RBI has directed financial institutions to refrain from charging foreclosure fees when it comes to floating interest rate home loans. Earlier, lenders would levy a prepayment penalty ranging between 2-5% of the outstanding principal at the time of refinancing the home loan. Under the new guidelines, individual borrowers of floating interest home loans are exempt from such penalty charges. The charges remain in place for individual borrowers of fixed interest home loans, and all non-individual borrowers.
Even if you are exempt from penalty charges, you are still required to pay a processing fee to your new lender which could vary between 0.5-1% of the loan amount. This amount is sometimes restricted by many lenders to Rs.5,000.
What are the eligibility criteria and documents required in order to quality for a home loan balance transfer?
The documents required for home loan balance transfer include proof of address, identity proof, photographs, proof of income, and latest bank statements. In addition to these, you will also have to provide documents related to the purchase of your home. These include the NOC from your developer/housing society, documents from the first lender, and documents that prove the ownership of the property for which you are taking the loan.
At the initial stage of application, you have to submit a letter to your current lender, requesting a balance transfer for your home loan. You will then get a letter of consent, a foreclosure letter, an NOC (no objection certificate), a loan statement displaying your EMI repayment track record, and a list of property documents. All of these have to be provided to your new lender, along with your personal identification documents.
You can use our eligibility calculator for home loan balance transfer, which will help you plan your next steps better.