Owning a house falls under the necessities of human beings. However, purchasing a residence requires substantial funding, which may not be affordable with savings alone. Hence, many individuals lean on housing loan that offer substantial funds.
In the competitive market, different financial institutions vary in interest rate. This is again a problematic factor for the existing housing credit borrowers paying high EMIs. To ease out this strain, many Housing Finance Companies today offer facilities like home loan balance transfer.
This feature allows the borrowers to reduce their equated monthly outgo by transferring the outstanding loan amount to a suitable interest levying financial institution. It is, therefore, vital to understand such a process in detail and use it effectively.
How does the home loan balance transfer work?
A home loan balance transfer is the process of shifting the existing outstanding balance to another lending institution. The main motto of this process is to gain a suitable home loan interest rate.
Typically, the process involves simple eligibility and less documentation. For instance, an individual having an existing Rs.2 lakh loan can transfer the balance to another financial institution offering lower rates of interest. This would gradually reduce the interest rates and support savings on disposable income in the long run.
Talking about Home Loan Balance transfer, there are various financial institutes which are providing Home Loan Balance transfer at different interest rates and different benefits. Talking about Bajaj Housing Finance Limited, it provides you transfer of your loan from other financial institutions to Bajaj Housing Finance at no extra cost and at lowest interest rate and amazing benefits. Below are some points which will help you to make a good decision, why you should opt for Home Loan Balance transfer and what are the benefits you will be getting from it.
Why should one opt for a home loan balance transfer?
Individuals with an existing home loan should opt for refinancing to-
- Gain an affordable interest rate which simultaneously brings down the home loan EMI.
- To reduce the overall cost of a loan to initiate better savings in the long run.
- Help in reducing the outstanding balance repaid by the borrower.
- Shorten the tenor for timely repayment and an improved credit report.
- To find a lender offering customised benefits and additional features.
- One can find benefits like a top-up loan and affordable foreclosure charges.
Seeing the current market, there are plenty of financial institutes providing home loan balance transfer. But different financial institutes have different eligibility criteria. However, to attain these advantages, one must fulfil the eligibility criteria mentioned by the lending institutions.
What are the eligibility criteria for a home loan balance transfer?
- The applicant should be an Indian residing in India.
- An applicant should be aged between 21 years and not more than 60 years.
- He/she should maintain a regular income source.
- The applicant has to be salaried or self-employed with proper income proof.
- He/she should prove the capability to repay the loan amount on time without defaulting.
List of documents required for a home loan balance transfer
- Identity Proof- A voter ID card, Aadhaar card, passport, NREGA card, driving license, PAN card, etc.
- Address proof – Passport, Voter ID Card, Aadhaar card, recent driving license, etc.
- Form 16 or salary slips for the previous year
- Last six months’ bank account statements
- Three months salary slips duly signed by a company
- Passport size photographs
- Filled application form
- Documents showing business ownership
- Financial statements of a businessperson or self-employed individual.
- A copy of the credit statement and related documents, showing the existing loan from a lender.
These are some of the documents which would be required for Home Loan Balance Transfer. Apart from the mentioned documents, lenders may ask for additional documents depending on their policy. Hence, individuals planning to transfer their outstanding balance must check the concerned financial institution’s updated documentation list.
Factors to check before opting for refinancing
- MCLR rate is used to determine the lending rate fixed by RBI. This is a vital factor every borrower must evaluate beforehand.
- Floating or fixed rate is again a matter of preference. However, individuals should switch to a fixed rate when the interest is lower.
- Since prepayment and transferring charges are levied on refinancing, one must ensure their financial strength.
- It is advisable to opt for balance transfer in the initial loan period since the interest portion in EMIs is relatively higher.
- Also, the facility can be beneficial when the repayment tenor is longer, around 10 to 12 years. Opting for refinancing at the end of the tenor would lead to higher costs in the balance transfer when compared to the interest savings.
Hence, these are some factors every individual must check before opting for a home loan balance transfer in 2021. Researching on these points would streamline the entire process and initiate better financial decisions and all these factors will help you to get your home loan balance transfer done with ease and hassle free.
