What is Home Loan Balance Transfer?
Banks and NBFC such as Bajaj Finserv provide a facility for transferring loan balance from one person to another. When you have an existing home loan but want to sell off your property against which you have taken the home loan, and a buyer wants to take a home loan from the same lender, an internal home loan balance transfer takes place.
During a home loan balance transfer, although the lender remains the same, the parties or applicants change. Even if the buyer has plans for taking a home loan to fund the purchase of the mortgaged house, the lender still requires the seller to settle his home loan first. Therefore, the lender usually insists on closing the earlier home loan before starting a new one during the home loan transfer process.
How to transfer a home loan to another person?
A home loan transfer process has some pre-requisites that you need to meet. As the existing home loan borrower, you must provide a letter requesting foreclosure of your loan in lieu of selling your property. If a buyer wants to invest in a resale flat, they have to apply for a home loan with a duly filled home loan application form, along with the applicable processing fees. A No Objection Certificate is also necessary from the developer or authority for a successful home loan transfer process.
The existing home loan is closed off with the proceeds of the newly sanctioned home loan amount. If it is a floating rate home loan, the seller of the property may have to pay the pre-payment penalty. The lender may disburse the sale price of the property or the remaining home loan amount to the applicant or developer, as is the case.
Also read: Know about home loan transfer interest rates, fees and charges