The home loan balance transfer facility allows the borrowers to transfer their loan to another lender if they get more favourable terms or a lower interest rate. In simple words, a home loan balance transfer helps you switch to a different lender in the middle of the loan tenure. This could provide you a lower rate of interest, smaller, more flexible EMI options or a tenure as per your varying needs.
How does home loan balance transfer work?
When you transfer your home loan, the new lender repays your remaining loan amount to the old lender and you start paying the EMI to the new lender. The process of home loan transfer requires almost all the documents that you had submitted while taking the original loan, if not more. For balance transfer, you will need to submit the following documents:
Letter of consent
A letter of consent is a formal authorisation taken from the existing lender to transfer the loan and also informing them about the transfer.
NOC from the lender
No Objection Certificate is a document that is taken from the lender when the loan is closed. However, in this case, you would have to take the NOC from the existing lender in which they would certify that after the home loan transfer, you do not owe them any loan repayment and they have no lien over your property. It also states that the lender has no objection to the loan transfer.
During the loan transfer you will need to submit property documents like sales deed, property purchase documents, a copy of the approved plan, etc. to verify that you have purchased the property.
You might have submitted post-dated cheques while taking the loan. The new lender could also ask you for those or new ones.
The new lender can ask you for your income documents to ensure that you are capable of repaying the loan amount. This is also to know about your income sources and stability. You can submit Form 16, latest salary slips, and the bank statement of the last six months of your bank account. If you are self-employed, you might also be asked to submit the income tax returns of the last two financial years, CA certified balance sheet and profit and loss account and current account statement of the business entity for at least six months.
For the new lender, balance transfer is just like approving a fresh loan, which is why they need your KYC documents like address proof and identity proof. For address proof, you can submit any one of the following –
- voter id card,
- Driving licence
- Aadhaar card
For Identity proof you can submit
- Voter id,
- Driving licence,
- Job card,
- Aadhaar card
In case of being self-employed, you could also be asked to submit the address proof of your business establishment like a registration certificate.
Home loan statement
You would need to take the home loan documents from the existing lender and hand over those to the new one. These documents would include your loan sanction letter, the loan agreement form, your approved loan foreclosure letter and also the home loan statement till date. The home loan statement would include the EMI prepayment statement and also the outstanding balance left to be paid towards your loan repayment.
While home loan transfer in India is a viable option to change your lender for better terms, ensure that you check your eligibility and documents before making the switch. Additionally, make sure that the amount spent by you on the processing fee and other formalities to get the balance transfer done is significantly lower rate than the gains or savings arising out of the transfer.