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A home loan balance transfer lets you migrate your existing loan portfolio from one lender to another. Availing of this facility, you can obtain benefits and financial opportunities facilitated by the new lender. For example, you can reduce the interest rate or get top-up loans if the new financial institution gives such an offer.

So, you need to know how you can proceed with this loan facility and get your loan account transferred smoothly.

Processes in a Home Loan Balance Transfer

Generally, the biggest component in a home loan is the interest outgo. By transferring the outstanding home loan balance to a different lender, you can substantially decrease the payable interest component. So, it is important to be aware of how this balance transfer works. Following are the processes involved in this facility:

1. Getting a Suitable Lending Institution

Lending institutions offer attractive loan offers, including reduced interest rates, to grab more customers from the market. You need to do thorough market research and find a suitable lending institution offering a home loan balance transfer facility at a lucrative interest rate. After this, you need to look at the eligibility requirements of that particular lender to know whether you can proceed with your balance transfer request.

2. Keeping Documents Handy

After selecting a suitable lending institution, you need to keep all the required documents updated and ready. These documents include property records, identity, and residential proofs, ITR records, etc. Apart from this, you also have to submit the present loan agreement papers.

3. Applying for Home Loan Balance Transfer

At this stage, you will have to apply for the facility and contact the lending institution. Most lenders currently offer this facility online to let you conveniently place your request. You can visit the online to apply for a home loan balance transfer facility offered by different lenders. This platform makes the process of comparing offers extended by different lenders. Resultantly, you can select a suitable lending institution with minimum effort.

4. Getting Ready for Inspection

Lending institutions thoroughly examine all documents submitted by willing applicants to ensure that they meet the eligibility for a home loan balance transfer. They may also send their representative to inspect the mortgaged property of applicants. Upon completing the verification, the institution approves the transfer request.

5. Obtaining Approval from the Existing Lender

You also need to approach your current lending institution and inform them about your decision on a home loan balance transfer. At this stage, you need to send a formal application form to the existing lender stating your decision and requesting the no objection certificate (NOC) and consent letter. This NOC contains information regarding outstanding loan balances.

6. Submit the Consent Letter and NOC

You need to provide the consent letter and NOC to the new financial institution along with a written application form stating the same. After this, the lender develops a draft of the loan agreement.

After getting customers’ signatures, the lending institution sanctions the loan and pays the outstanding amount to the previous lender. Now, you will complete your home loan balance transfer. You need to check the following two factors at this stage:

  • Property document transfer
  • Payment of outstanding loan balance to the previous lender

This way, you can finish their home loan balance transfer procedure. While opting for this facility, you need to understand how much amount you can save by this method. You can easily calculate this with the help of a home loan balance transfer calculator facilitated by major financial institutions. 

You can obtain all the benefits given by the new lending institutions by completing the home loan balance transfer process. While opting for this facility, you need to measure how much borrowing cost you will reduce by availing of this facility. Unless there is an opportunity to reduce borrowing costs, migrating to another lender can be fruitless.

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