Housing loan balance transfer is a facility through which a borrower can transfer the existing loan balance from one lender to another. During the transfer, a borrower forecloses the loan account with the existing financial institution and continues repayment of the remaining loan balance as per revised terms with the new lender. Balance transfer of home loans is one of the most beneficial facilities to opt for better terms and conditions if available on the market. It is not uncommon for borrowers to transfer their existing loan balance for better repayment terms and benefits.
Home loan transfer has to be done in a systematic way. The entire process involves –
- Submitting a letter to the lender of the existing home loan, requesting for a balance transfer.
- Issuing of necessary documents by the existing lender.
- Submitting all the mandatory documents to the other lender to transfer the home loan balance.
- Verifying and evaluating the individual’s eligibility for housing loan balance transfer.
Once the above-mentioned steps are complete, the balance transfer takes place. The new lender essentially repays the remainder loan to the existing lender, and the borrower continues repayment with the former.
Every lender has different terms and conditions regarding home loan balance transfer. However, after completing the necessary steps, one can switch his existing loan to a better one by applying for a home loan balance transfer.
Documents required for housing loan balance transfer
Documents required for transferring the home loan balance can be classified into two sets. Firstly, the borrower will have to collect certain documents from the lender of the existing loan. Secondly, some documents will be needed to be submitted to the new lender.
The documents which the borrower will have to collect from the current lender are –
- Letter of foreclosure
The existing lender provides a letter of foreclosure once the new lender has cleared off the outstanding debt amount. This document states that the home loan has been foreclosed on a certain date and that there is no credit amount due on loan.
- Letter of consent
Once the request for the balance transfer is approved by the existing lender, a consent letter will be provided to the borrower.
- No Objection Certificate addressing the home loan transfer
The borrower will have to obtain an NOC certificate from the current lender, which states that the outstanding loan amount has been repaid, vital to go forward with the housing loan balance transfer.
- Home loan statement
This includes the records of the debt payment and the outstanding credit amount of the home loan.
- Documents and papers related to the property
Borrowers will have to collect all the property-related papers submitted to the existing lender.
Documents needed to be submitted to the new lender include –
- KYC documents – Aadhaar card, PAN card, voter ID card, passport, driving license, etc.
- Property documents –These documents include the following papers –
- Original sale deed of the property.
- Land and building tax payment receipts.
- Documents stating the cost estimation behind the property construction.
- Financial documents- This includes salary slips, bank statements, IT returns, etc.
- Paperwork of the existing loan- All the documents collected from the existing lender.
Some of the above-mentioned documents are the same as the documents needed to apply for a home loan online. Certain charges will also be applicable when an individual opts for housing loan balance transfer.
The borrower of a home loan must check the policy set by the lender in case of a home loan transfer.
Housing loan balance transfer is also a great option when an individual is looking for an additional credit amount. In this case, he/she can avail the balance transfer facility quicker by providing the above-mentioned documents. Loan balance transfer also means that the borrower need not anymore look for other home loan repayment options for the existing loan. He can instead concentrate on a top-up loan or look for the lender offering maximum benefits on home loans.