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Home Loan Balance Transfer
A balance transfer of a home loan, also known as a mortgage balance transfer, refers to the process of transferring the outstanding balance of an existing home loan from one lender to another. This is typically done to take advantage of better terms, lower interest rates, or other benefits offered by the new lender.
Reasons for Balance Transfer
Lower interest rates
If the current lender's interest rates are higher than those offered by another lender, transferring the balance can lead to reduced monthly payments and overall interest costs.
Better terms
Some lenders may offer more favorable terms, such as flexible repayment options, lower fees, or improved customer service.
Consolidation of debts
Homeowners may choose to consolidate their debts by transferring the outstanding balance of their home loan along with other debts into a single loan with a lower interest rate.
WHAT ARE THE ELIGIBILITY CRITERIA FOR BALANCE TRANSFER OF HOME LOAN?
Credit Score
Lenders often require borrowers to have a good credit score to qualify for a balance transfer of a home loan. A higher credit score demonstrates a borrower's creditworthiness and ability to repay the loan on time.
Loan Repayment History
Lenders may assess the borrower's repayment history on the existing home loan. A history of timely payments can increase the likelihood of approval for a balance transfer.
Income and Employment Stability
Lenders typically evaluate the borrower's income and employment stability to assess their ability to repay the loan. Borrowers with a steady income from a stable job or business are generally viewed more favorably.
Pre-Existing Home Loan
To take balance transfer of home loan, borrower must be having a home loan with some other bank or NBFC.
Property Valuation
Lenders may conduct a valuation of the property to assess its current market value. The property's value should be sufficient to meet the lender's requirements and ensure adequate security for the loan.
Outstanding Loan Status
The existing home loan should be in good standing with no defaults or overdue payments. Lenders may hesitate to approve a balance transfer if there are any issues with the borrower's repayment history.
Other Financial Obligations
Lenders may also consider the borrower's other financial obligations, such as existing loans, credit card debts, or outstanding dues. Borrowers with manageable debt levels are generally viewed more favorably.
Lenders often require borrowers to have a good credit score to qualify for a balance transfer of a home loan. A higher credit score demonstrates a borrower's creditworthiness and ability to repay the loan on time.
Loan Repayment History
Lenders may assess the borrower's repayment history on the existing home loan. A history of timely payments can increase the likelihood of approval for a balance transfer.
Income and Employment Stability
Lenders typically evaluate the borrower's income and employment stability to assess their ability to repay the loan. Borrowers with a steady income from a stable job or business are generally viewed more favorably.
Pre-Existing Home Loan
To take balance transfer of home loan, borrower must be having a home loan with some other bank or NBFC.
Property Valuation
Lenders may conduct a valuation of the property to assess its current market value. The property's value should be sufficient to meet the lender's requirements and ensure adequate security for the loan.
Outstanding Loan Status
The existing home loan should be in good standing with no defaults or overdue payments. Lenders may hesitate to approve a balance transfer if there are any issues with the borrower's repayment history.
Other Financial Obligations
Lenders may also consider the borrower's other financial obligations, such as existing loans, credit card debts, or outstanding dues. Borrowers with manageable debt levels are generally viewed more favorably.
Documents Required
✓ KYC Documents – Passport, Driving License, Aadhaar Card, Voter ID Card, Pan Card.
✓ Employment details - ID Card, last 3 months’ salary slips(salaried) / ITR returns along with the income generated by the applicant and the business entity (CA attested) for the last three financial years ( self-employed ).
✓ Bank account statements for the last 6 months (salaried)/ 12 months (self-employed).
✓ Document of proof of business of minimum 5 years (for businessmen/ self-employed professionals).
✓ Form 16 (Part A & Part B) and filed Income Tax Returns (ITR) for the past two years.
Property Documents
✓ Encumbrance certificate
✓ Plot Title Deeds
✓ The local authority has sanctioned a copy of the plan.
Loan Documents
✓ Exisiting Home Loan Sanction Letter
✓ Home loan foreclosure letter from existing bank or NBFC
✓ List of documents mortgaged with the existing bank or NBFC
✓ 12 Month up to date bank statement showing repayment of the loan
✓ Copy of Sanction Letter
✓ Up to date loan account statement
✓ Employment details - ID Card, last 3 months’ salary slips(salaried) / ITR returns along with the income generated by the applicant and the business entity (CA attested) for the last three financial years ( self-employed ).
✓ Bank account statements for the last 6 months (salaried)/ 12 months (self-employed).
✓ Document of proof of business of minimum 5 years (for businessmen/ self-employed professionals).
✓ Form 16 (Part A & Part B) and filed Income Tax Returns (ITR) for the past two years.
Property Documents
✓ Encumbrance certificate
✓ Plot Title Deeds
✓ The local authority has sanctioned a copy of the plan.
Loan Documents
✓ Exisiting Home Loan Sanction Letter
✓ Home loan foreclosure letter from existing bank or NBFC
✓ List of documents mortgaged with the existing bank or NBFC
✓ 12 Month up to date bank statement showing repayment of the loan
✓ Copy of Sanction Letter
✓ Up to date loan account statement
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