The long duration of home loans means that once it will get approve, they need to be repaid at the same interest rate throughout their tenor. However, interest rates can vary across lenders and are subject to RBI guidelines, which keep fluctuating. Here, individuals finding themselves stuck with an interest rate higher than the current applicable rates can opt for a home loan balance transfer. They must, however, understand how to apply for house loan transfer and what documents are require for quick approval.
Home loan balance transfer process
A home loan transfer is a process by which the entire principal amount of your loan is transfer from one lender to another for a lower rate of interest.
Follow the steps below to complete the home loan transfer process:
- Send a balance transfer request application to your present lender. This may have to be in a specified format or a pre-set form.
- Obtain a consent letter and No Objection Certificate (NOC) from your current lender. Both of these are mandatory for the home loan balance transfer process.
- Contact the lender you want to shift your loan to and apply for a home loan balance transfer.
- After the initial approval of your application, submit the relevant documents required for the transfer to your new lender. These will include the NOC, KYC documents, property papers, etc.
- Your documents will be verified by the new lender. If approved, they will foreclose your loan with the existing lender and transfer the remaining balance to their own account.
- From this point, you have to repay the debt to the new lender at their interest rate and repayment tenor.
Documents required for a home loan balance transfer
You will need the following documents for the home loan balance transfer:
- Consent letter: Formally notifies your intent for the home loan balance transfer and requests approval from your current lender.
- No Objection Certificate (NOC): A letter from the present lender declaring no objections to the transfer.
- Loan agreement: The agreement letter of your loan being sanctioned by the current lender.
- Foreclosure letter: Document from the current lender that declares no outstanding dues remaining with them. This is usually available after your new lender forecloses the loan on your behalf.
- Home loan statement: This specifies the details of your home loan, including the credit taken, EMIs paid, tenor, outstanding amount, etc.
- Property documents: These have to be recovered from your current lender and submitted to the new one.
- KYC documents: These will include your identity and address proof documents such as Aadhaar card, PAN card, passport, etc.
- Employment documents: These documents will indicate your income sustainability.
- Financial documents: These documents will confirm your repayment capacity and includes your salary slips, Form 16 from your employer, and bank statements for the past six months.
Multiple financial institutions offer pre-approved loan offers to existing customers to simplify and speed up the loan approval process. Such offers are available on multiple products such as home loans, loans against property, etc. You can check your pre-approved offer by entering a few basic details.
The recent fall in home loan interest rates has led to a rise in home loan refinance applications from borrowers who want to pay lower interest on their loans. Here, knowing the documents necessary for a transferring your home loan balance will help prevent rejection of one’s application.
Additionally, being aware of the things to keep track of when you do a home loan balance transfer will help to successfully transfer your home loan to a lender charging a low interest rate. This will help reduce your EMIs with a home loan balance transfer or lower the total repayment tenor.