A Home Loan can be of immense help in organising funds while you purchase or construct your house. However, while seeking financial assistance through a Home Loan, sometimes you may find yourself unhappy with the terms of the loan. Today, several banks offer you flexible tenure to repay Home Loans. However, a Home Loan Balance Transfer with the right bank can help ease the process of repayment.
In this article, let us dive further to understand this transfer better.
What is Home Loan Balance Transfer?
Home Loan Balance Transfer is also commonly known as Home Refinancing. This service comes in handy to switch your Home Loan balance to another bank that offers you more flexible repayment options than your parent bank. The new bank could be offering attractive rates of interest, improved tenure, or better repayment facilities. Once you select a new bank to move your Home Loan, the new bank pays your parent bank the outstanding amount.
What is the Home Loan Transfer Process?
The following steps will allow you to initiate a Home Loan Transfer to other banks:
- Apply: Before initiating a Home Loan Balance Transfer, you need to inform your present lender that you wish to do so. You can do this via a letter listing why you opt for the transfer or an application form, whichever your bank requires.
- No Objection Certificate (NOC) or Consent Letter: After applying, the original lender will offer you a NOC or consent letter. This document is essential for applying for the transfer with a new lender.
- Submitting the Documents: Now that you have the NOC, you can hand the required documents to the new lender. Along with the NOC, you might have to submit KYC paperwork, property papers, loan balance, and interest statements. Along with this, you need to submit all the mandatory documents as cited by the bank.
- Confirmation from Old Lender: After handing over the documents, wait for confirmation from your old lender that the original loan has been closed.
- Payment of Fees: Once you receive the confirmation, you can pay the requisite fees to the new lender and begin a new loan contract.
What are the Home Loan Transfer Charges?
As per the Reserve Bank of India (RBI) guidelines, the lender cannot levy any foreclosure charges on floating rate loans from where you wish to transfer your Home Loan. However, certain banks can charge a pre-payment penalty fee on fixed-rate loans ranging from 1-3%.
Why and how to use a Home Loan Balance Transfer Calculator?
To confirm that opting for the transfer is a wise choice, you can use the Home Loan Balance Transfer Calculator. This calculator is an online tool that allows you to compare the terms offered by the old and new lenders. All you have to do is, provide basic details of your loan such as: - Principal outstanding on the old loan
- Tenure of the loan
- Interest rate of the loan
The calculator will display the savings you can enjoy after opting for a Home Loan Balance Transfer. Thus, helping you make a better decision.
HDFC Bank recognises the importance of having a home and offers Home Loans at attractive interest rates with easy repayment methods and flexible tenures. Click here to apply for an HDFC Bank Home Loan!
What is the difference between a base rate and MCLR rate on Home Loans? Click here to read more!
*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Home Loan at the sole discretion of HDFC Bank limited. Loan disbursal is subject to documentation and verification as per Banks requirement.
