Home Loan Transfer to SBI, ICICI, HDFC, Axis Bank, PNB Housing

Home loans are long tenure loans of up to 30 years, and hence, you are bound to spend a large amount of your income servicing it. Home loan interest rates matter as more than 50% of your home loan EMI component is the loan interest amount you pay to the bank during the loan tenure. The current interest rates on home loans range from 6.50% to 20.00%, with the lowest EMI of ₹ 632 per lakh. You can consider transferring your home loan to another bank if the interest rate and EMI you are paying on your existing loan is higher than the lowest rate and EMI offers in the market.

Ideally, the benefit of home loan transfer is in the initial 4 to 5 years of loan as you pay the highest interest component in the initial years. However, loan transfer in the mid or end of the tenure can work against you financially as you had already paid the higher interest part to the lender. So, before you decide to opt for the home loan transfer to another bank, do a thorough analysis of all savings and costs associated with the loan transfer.

To transfer your home loan from one bank to another, you need to follow the home loan balance transfer process as provided below:

• Check your current rate and calculate interest savings
• Calculate the estimated cost on account of various fees and charges associated with the balance transfer.
• Compare the new list of banks and shortlist a new bank that you wish to transfer your loan to; decide if you want a top up loan or not.
• Obtain a list of property documents deposited with your existing bank (in case this is not available with you already) request a foreclosure letter for home loan transfer to another bank from the existing bank.
• Apply for loan with new bank with a photocopy of property documents as per the list of property documents with the existing bank.
• Obtain a sanction letter and execute new loan agreement.
• Take disbursement from the new bank by way of cheque/ demand draft in favour of the existing bank and also deposit the same.
• Obtain property documents from the old bank and deposit with new bank.

Home loan transfer charges can be different depending on your existing bank, the new bank, and the state of transfer. Key home loan balance transfer charges as per RBI guidelines include foreclosure, processing fees, title deed charges and other incidental charges amongest others. Some of these are explained below:

• Foreclosure charges are payable to the existing bank for take over of fixed rate home loans. In case of floating rate home loans, banks are not allowed to take any fees to foreclose your loan.
• Processing fees on transfer may range from a flat fee ₹ 10,000 to up to 1% of the loan amount. However, banks offer discounts on processing fees from time to time and you can get attractive offers with marketplaces like MyLoanCare to get the most suitable loan offer for you.
• MODT (Memorandum of Deposit of Title Deed) charges of 0.2% to 0.5% on mortgage payable in Mumbai, Pune, Maharashtra, Chennai, Tamil Nadu, Bangalore, Karnataka, Hyderabad, Telangana and Rajasthan among others. No such stamp duty is payable in places like Delhi, Gurgaon(Haryana), Noida(Uttar Pradesh).
• Incidental charges such as SRO registration payable in Mumbai, Pune and other parts of Maharashtra.

You can opt for a home loan balance transfer if you have an outstanding home loan. Basic eligibility criteria are age, income, employment history and loan to value ratio. Other main eligibility factors which are important for refinancing home loan are:

• You must have a running home loan from another lender.
• You must have paid at least 6 to 12 EMI’s on your existing loan before opting for balance transfer. However, this condition may be waived at times and a home loan takeover may be possible even if the loan has not run for 6 – 12 months.
• There should not be any default in the payment of EMI on existing loans.
• In the case of under-construction property, the project must be approved by the new lender. Note that balance transfer of home loan on new property whose possession has been handed over but registration has not been done may not be possible.
• In case of ready-to-move property, registration should have been completed.

To apply for a home loan transfer from one bank to another, you need to submit similar documents as availing of a new home loan. The list of documents for both salaried and self-employed is provided in the below table.

	Salaried	Self Employed
Loan statement (loan track) and list of property documents (LOD) in possession of existing lender	✔	✔
Last 12 months' statement of bank account from which loan EMI is paid	✔	✔

	Salaried	Self Employed
Application Form with photo and signed by Primary Borrower and Co-borrower(s)	✔	✔
Identity Proof of Primary Borrower and Co-borrower(s)	✔	✔
Residential Address proof of Primary Borrower and Co-borrower(s)	✔	✔
Age Proof of Primary Borrower and Co-borrower(s)	✔	✔
Office address – ownership/ lease / rent agreement/ utility bill		✔

	Salaried	Self Employed
Last 3 years’ Form 16, last 6 months salary slip, last 6 months’ bank account statement showing salary credit	✔
Last 3 years ITR (self and business), profit and loss account, balance sheets certified/audited by a CA. Last 12 months bank account statement (self and business)		✔
Certificate and Proof of Business Existence		✔
Business Profile		✔

With MyLoanCare Home Loan Balance Transfer Calculator, you can calculate your loan amount eligibility and identify offers with ‭lower home loan rates than the existing rates you are paying. Do complete market research before you choose the bank to transfer your loan and apply for a balance transfer in terms of current interest rates, processing fees, home loan top up schemes from various banks, movement in response to policy rate changes as well as customer reviews of the bank.

To avail the best home loan balance transfer offers or deals, you need to follow the below-mentioned steps:

• Check interest rate track record of the new lender : You must check that the lower interest rate being advertised by the new lender is real and not a short term marketing gimmick. Please ask your loan advisor for the benchmark rate track record of the new lender.
• Satisfy yourself about service quality of the new lender : Check that the service quality offered by the new bank you are choosing is up to your expectations. Lower rates should not come at the cost of inferior service.
• Check the benchmark rate: After RBI’s guidelines for Repo Rate Linked Home Loans, banks have introduced low rate home loan schemes linked to Repo Rate.They are, thus, considered more preferable over other benchmark rates such as PLR or MCLR because of more transparency and easier transmission of lower rates to the general public.
• Is the spread variable or fixed: Interest rate on floating rate loans consists of two parts – benchmark rate and spread above it. While the benchmark rate is expected to change over time, the spread is supposed to remain constant except in case of a default. However, some banks offer floating rate loans with both the benchmark and the spread being variable. In the case of many such loans, borrowers see their loan interest rates rise sharply after a few months. So, avoid loans with variable spreads and instead opt for floating rate loans that vary in the terms of interest rate only with change in the benchmark rate.
• Estimate transaction cost: Check the cost that you will incur for effecting the change. These include processing fees, stamp duty (in some states like Maharashtra) and documentation charges.
• Issue notice to existing bank: Some banks insist on prior notice before you can prepay your home loan. Check your loan agreement carefully and ensure that due notice is given to or waived by your existing bank.

The home loan BT process on under construction property is similar to that of ready-to-move property. However, in case of under construction property, you need to take care of few additional points:

• Check loan eligibility as per new bank: Cost of property consists of multiple heads such as basic price, preferred location charge (PLC), external development charges, internal development charges, security deposit, electrification charges, power back-up charges, service tax, fire fighting charges etc. Norms for inclusion of each cost head differ across lenders. If your chosen new bank does not include some of the heads in the cost of property which were included by the old bank, the loan eligibility may come down and you may need to increase your own contribution.
• Select the right time to do the loan transfer: The loan transfer process may take 10-15 days from the date of application .Your existing bank may typically take another 10-20 days to hand over property documents to the new bank. You will not be able to avail further loan disbursements during this period. Hence, it is important that you decide the transfer of your loan at a time when you don’t expect any fresh demand from the builder for the next month or so.
• Get fresh Permission to Mortgage and Tripartite agreement: A builder will need to issue fresh permission to mortgage (PTM) to the new bank and enter into new permission to mortgage. This typically takes no more than 2-5 days, but borrowers must check with the builder.

In summary, a balance transfer is beneficial as it helps reduce the cost of borrowing significantly. Home buyers must exercise caution in the balance transfer process so that the process is smooth.

✅Which bank is best for home loan balance transfer in India?

A number of banks provide the home loan balance transfer option at varying interest rates. Presently, Citibank, Bank of Baroda, Kotak Bank, IDFC First Bank offers home loan transfer at minimum interest rates starting from 6.50%.

✅Is home loan balance transfer a good idea?

A balance transfer is a good option for home loan borrowers. This is because the transfer of loan to other banks provides the benefit of lower interest charged on loans. In addition to that, a balance transfer could even provide top-up loan offers to borrowers on the existing loan offers.

✅Can home loan be transferred to another person?

Yes, home loan balance can be transferred to another person along with the transfer of ownership. However, for the home loan transfer to another person, the new borrower should be eligible for a home loan and the previous borrower should meet the foreclosure formalities.

✅Can I transfer my home loan to another bank after availing the PMAY benefit?

Home loan balance transfer can be availed under PMAY. However, it is possible only for home loans availed after June 17, 2015.

✅Do I require a guarantor for home loan transfer?

Most of the banks do not require a guarantor for taking over an existing home loan. However, this may further depend upon the eligibility parameters of the new bank you are shifting your home loan to.

✅What is the maximum limit of Home Loan Balance Transfer?

The maximum amount to be transferred is equal to the outstanding amount. However, you may avail top up loans such that the total loan including home loan and top up does not exceed 75% of market value of the property.

✅When should I avail the home loan balance transfer?

In case you are paying a higher interest rate than those available in the market and the difference is more than 0.5%, you may consider transferring your loan.

✅When should I not consider transferring my home loan?

You must not switch if one of the following situations is applicable. (i) Prepayment penalty is payable to current bank – this is valid in case of fixed rate loans (ii) You plan to sell the property in the near future (iii) The balance period of your existing loan is less than 2 years

✅Can I get a top up loan at the time of balance transfer?

Based on your eligibility, the lender can offer you top up on the home loan to be transferred to the new bank but there may be processing and legal charges applicable.

✅Is it possible to merge two existing home loans through balance transfer?

Yes, it’s possible to merge two existing loans into a single loan to get lower interest rates.

✅How much time will it take to transfer my home loan from the existing bank?

The process of home loan balance loan transfer may take 10-15 days from the date of application and your existing bank may typically take another 10-20 days to handover property documents to the new bank.

✅How to transfer a home loan from one bank to another?

You can apply for the home loan transfer from one bank to another through net banking/mobile banking. Banks also allow the transfer facility through phone banking by calling home loan customer care. Before applying, you would have to obtain a consent letter from your existing bank along with the outstanding amount on your home loan.