Opting for a home loan balance transfer allows borrowers to refinance their existing credit and transfer it to a new lender to avail of better terms and services. The primary reason behind balance transfer, usually, is a lower interest rate, which results in lower EMIs and more savings on repayment. By meeting the required eligibility parameters and submitting the set of documents necessary, borrowers can maximise their savings.
To opt for this facility and reduce your repayment liability, here are the documents you will need to submit:
5 essential documents required to complete the home loan balance transfer
Here are five important home loan documents required to complete this refinancing process:
- Consent letter
To initiate a balance transfer process, individuals need to submit an application to their current lender. They must also ask for a letter of consent, which they must present to the new lender of their choice to initiate this process on that end as well.
- NOC papers
Along with the consent letter, individuals need to secure a no-objection certificate from their current lender, which will help them to start the process with the new financier.
- Foreclosure papers
One of the most vital pieces of paper in the home loan transfer process is this one. The foreclosure letter or certificate reflects that a borrower has successfully settled the existing loan with a particular financial institution and has no outstanding.
- Property documents
Since the property documents remain with the lender till the home loan is repaid, during the balance transfer, one needs to secure this document to initiate this process.
- Home loan statement
This particular document highlights the details of a housing loan such as the total loan amount, current outstanding amount, and interest rate and type. It also includes the EMIs and repayment history. Maintaining a repayment history devoid of any defaults helps improve the home loan eligibility criteria required for loan transfer.
Apart from this list of 5 vital documents, one needs to gather the below papers to complete their loan transfer without hiccups.
- Loan agreement: A loan agreement is a legal paper between a borrower and a financial institution stating the terms of credit and repayment. Securing this paper is vital during home loan balance transfer.
- Post-dated cheques: It is necessary to submit post-dated cheques while availing a home loan. Therefore, during the loan balance transfer, it is imperative to collect them from the current lender.
Collecting these documents and submitting them is not where this checklist ends. Alongside these aforementioned papers, one needs to provide a set of KYC documents, income proof, other financial documents, and property papers as well. Keeping these documents handy can allow individuals to complete this process faster.
Otherwise, they can opt for a lender that extends pre-approved offers. These personalised offers can shorten the loan application process, saving time. Applicants can now check their pre-approved offers beforehand by entering their name and contact details.
Keeping these documents in line is not enough to meet home loan eligibility for a balance transfer. Borrowers need to meet lender specific parameters to avail the benefits of this facility.
Benefits of housing loan balance transfer
A housing loan balance transfer offers several benefits, including:
- Lower interest rates on home loans
- Better loan terms such as repayment flexibility, improved customer service, and no charges on part payment and foreclosure
- Top-up loan to meet an array of other expenses
- Adjusting the loan tenor as per repayment capacity
A home loan balance transfer is a great way to reset a loan and ease the repayment burden. However, it is imperative to perform a cost benefit analysis and then make a decision to ensure significant savings.
If you have availed of a home loan of Rs.25 lakh at 7% for 20 years, your EMI will amount to about Rs.19,000. After 4 years of repayment, your loan principal outstanding is about Rs.17.35 lakh, and now if you want to shift your remaining home loan to a new lender at 6%, your EMI will come down around to Rs.14,000. Hence, you can enjoy savings of about Rs.4,500–5,000 per month.
Now that you know all about the documents necessary for a balance transfer, plan to opt for loan transfer. Do not forget to compute the total savings amount and accordingly pick the perfect timing of applying.