Know How to transfer a Home Loan to another Bank

Know How to transfer a Home Loan to another Bank

A home loan is the necessity of maximum homebuyers as the home buying process includes a hefty amount. The changes in the Repo rate [RR], Reserve Repo Rate [RRR] and other by RBI reflect as a change in the interest rate on home loan. This is a major concern for the loan borrowers and thus we have listed everything you need to know about transfer of a home loan to another bank.

What is a Home Loan Transfer?

This process is also known as refinancing a home loan. Here, a loan borrower can switch to a new lender who would offer a low-interest rate in comparison to the present financial creditor. For example, if the present bank has sanctioned you a home loan on 9% interest and other bank is providing the same amount of loan on 7.5%. Then you can transfer the remaining home loan balance to another bank.

What are the Features of Home Loan Transfer?

  • Firstly, you can transfer the outstanding home loan amount from one bank to another that charges the minimum interest rate on home loan.
  • Secondly, you are required to pay 1% of the loan to the new lender as the loan transfer application is also considered as a fresh home loan.
  • Thirdly, the homebuyer can transfer the ongoing loan only after the completion of pre-defined tenure that is mentioned on the loan agreement.
  • Fourthly, the loan borrower has to deposit the entire outstanding principal and interest amount to the new lender once the process of home loan transfer is completed.

Eligibility for Home Loan Transfer

Any salaried, professional, businessman and self-employed person has the eligibility to switch bank for home loan. However, all these loan applicants fall under various categories and thus criteria for borrower switch is as follows:

  • A person holding Indian citizenship and aged between 21 to 60 years are eligible for transfer of the home loan. However, in case of self-employed or businessman the maximum age limit is 65 years.
  • Your credit score alias the CIBIL score should not fall low during the time of home loan transfer as the financial creditor assess this factor before approving the loan transfer. The CIBIL score that you held at the time of availing home loan is not considered in this process. So, maintain the credit score until the competition of bank switch.
  • A person is required to be working with the current organization for some predefined period or the company should be operational for a long-time.
  • You should yield the minimum monthly salary framed for availing the home loan.

Documents required for Transfer of Home Loan

A home loan transfer is treated as a fresh loan application and thus the loan borrower is required to submit the below-mentioned documents for home loan transfer:

  • Duly filled home loan application with passport-size photographs
  • Salary Slip of the last three months as it describes the basic pay along with HRA and other deductions
  • 6 months bank statements that show timely credit of salary
  • Identity proof such as PAN Card, Driving License, Aadhar Card
  • Residence Proof like Electricity bill
  • Age Proof such as 10th, 12 Certificate, Voter Id Card
  • The businessmen are required to show the type of business and bank statements to reflect yearly turnover
  • Bank statements of the account from which home loan EMIs till now were debited
  • Loan statement of the current bank and all the property documents

Why Should you consider home loan transfer?

The interest rate on home loan witness changes and thus the new loan applicants sometime gets funds approved from banks at a low rate. However, the old loan borrowers have to pay a higher rate of interest. In this scenario, you can consider the option to transfer a home loan.

Availing a home loan is a big task, hence you must think twice before laying papers for a loan transfer to another bank. You are suggested to assess the situation while regularly paying the EMIs as the timely change in the Current repo rate, Reserve repo rate and other by RBI reflects in interest rate on home loan overall.

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