Balance transfer of home loan occurs when a borrower transfers the remaining unpaid principal amount of his loan to some other bank to get the benefit of lower interest rates. It is a common practice home loan market. Every home loan borrower wants to get rid of the burden of high rate of interests and huge expenses on EMI. A reduced interest rate and EMI can be a splendid relief for him. Almost every bank provides the facility of balance transfer on home loan.
How Does it work ?
When a loan is transferred to a new bank, the old lender who gave loan to the customer gets the remaining unpaid amount of the loan from the new lender and the borrower will now pay the EMI’s on lower interest rates to the new bank.But one thing to remember is that, if only few years of tenure are left then the balance transfer may not be a good deal as the bank transfer is a long procedure and banks charge a considerable fees for doing the procedure of balance transfer. On the other hand, a borrower who has spent around two or more years of his loan tenure is in an ideal situation for a balance transfer.
ELIGIBILITY CRITERIA FOR HOME LOAN TRANSFER
When choosing your home loan transfer facility you need to take care of basic criteria.
- The applicant’s age must be between 21 to 60 years. In case of self employed it can be extended up to 65 years.
- Major factor deciding loan amount on a number of factors like age of the applicant, current income, debt and retirement age of customer.
- Long track of customer should be clear for at least 12-18 months. Without default in repayment of EMI’s.
- Applicant should have at least 1year experience in current company and total experience of minimum 2-3 year. Should have filed ITR or have form 16
- Few financial institution also need gross family income and good CIBIL Score of 700 plus.
DOCUMENTS REQUIRED FOR HOME LOAN TRANSFER:
In home loan transfer facility customer is treated almost as new customer to Bank and all enquiries related to CIBIL past loan track are observed. For getting BT facility documents need are:-
- Fully completed Application form.
- Residential address proof
- Identity proof can be like pan card, voter card
- Self attested photographs of applicant
- Age Proof is also required that can be verified from Pan card, voter card or 10th mark sheet.
- Official address proof can be verified by utility bill like electricity bill, house tax or water bill.
- Income Proof can be seen by prior 6 months bank account statements that reflect salary credit, last 6 months salary slips and Form-16 in continuity for the last 3 years.
For Self-Employed individuals, the income proof can be considered as-
- Last 3 years ITR (self and business),
- Profit and Loss Account,
- Bank account statement (self and business) for last 12 months.
- Certified balance sheet accounted by CA
- Complete Business Profile and Proof of Business Existence.
- A complete document of property consisting of all paper. That is currently in possession of the present home loan lender and loan track record copy.