banner banner

Stay Up-to-Date with Our Blogs & Articles

The texts on this website have been translated using an automated translation tool and its accuracy cannot be guaranteed. We recommend referring to the English version of the content for the most precise information. In the event of any disputes or inconsistencies, the contents in the English language shall be considered final and binding. IIFL HFL disclaims any liability or responsibility in this matter.
Go Back to Main blog page

Process of Home Loan Balance Transfer and Its Benefits

By IIFL Home Loans | Published On Nov 02 2021 9:30 AM 1 min read 776 views 3466 Likes
Process of Home Loan Balance Transfer and Its Benefits

Have you taken a home loan and now feel stuck with higher interest rates? No need to worry. Home loan balance transfer gives you the option to switch to a new lender who charges a lower interest rate. This blog will guide you through the process of a home loan balance transfer.

Let's start with understanding Balance Transfer- It is basically a process of getting the current loan transferred from one financial institution to another.

The tenure of a housing loan is long-term, usually between 10-30 years. Even though a scheme looks lucrative in the beginning, there can be instances when you feel uncomfortable with rigid interest rates, hidden charges, stringent compliances, and unfavourable loan terms.

As a saviour, a home loan balance transfer can reduce your excess EMI baggage and make your repayment more affordable. Whatever be the case, you can select a viable new lender according to your preferences.

So, here is the step-by-step process to apply for a home loan balance transfer with the new lender:

Step – 1: Apply for a Foreclosure Statement and List of documents

Once you have chosen the new lender, you need to inform your current lender about it. You are required to submit the following to the new lender until the old loan is paid off:

  1. List of loan documents held by the current lender, and

  2. Foreclosure Statement

Step – 2: Apply for the Balance Transfer

On receiving the documents, you can apply for the balance transfer. You need to submit the following documents along with your transfer application:

  1. Application Form

  2. KYC

  3. Income documents

  4. Property Documents

  5. Statement of the housing loan with current lender showing regular loan repayments

Step – 3: Approval of New Loan and Repayment of the Old Loan

In balance transfer cases, the cheque will be drafted favouring the old lender for the loan sanctioned amount. New Lender will draft the cheque basis the foreclosure letter received from the previous lender.

Step – 4: Release of Property Documents by the Old Lender

Once the previous loan is closed, property documents are released by the lender. Along with this, a No dues certificate is also issued in your name. It states that no amount is due against your old loan.

Step – 5: Deposit the Property Documents to Your New Lender

You need to deposit your property documents to the new lender who creates a valid mortgage on your property.

Evidently, a balance transfer requires some time and effort on your part. So, why should you go through all this pain? Let's talk about the benefits that you can expect from a home loan balance transfer.

Benefits of Home Loan Balance Transfer

Commonly, home loan customers switch to lenders who provide favourable loan terms and interest rates. Having said that, are these the only benefits of a home loan balance transfer? Here is the list of benefits that you can derive if you opt for it:

  1. Lower Interest Rates:The new lender can charge lower interest rates. A reduction in interest charge can reduce your monthly instalments leaving space for more savings.

  2. Flexible Interest Rates:The new lender might apply interest based on the RBI's benchmark lending rate. In this case, whenever RBI reduces its benchmark, the benefit is passed on to you by means of interest rate reduction.

  3. Longer Tenure:The new lender can allow you to stretch the loan tenure further so that your EMI is reduced, and you can save more for your monthly expenses.

  4. Increased Loan Amount:The new lender may allow a higher loan amount at your current income levels. In this case, you can get additional funds for constructing your house.

  5. Reduced Compliances:Unlike your current lender, the new lender might ask for lesser compliances and avoid a complex documentation process.

  6. No Hidden Charges:Where the old lender might have misrepresented the loan charges, the new lender can offer transparency with no hidden costs.

Once you are certain, prepare your documents according to the steps above and research the benefits in advance to benefit from the best option. You can apply for a home loan balance transfer with IIFL Home Loans to enjoy lower interest rates and a host of other benefits.


apply loan

Quick and Hassle Free Loan Processing

green ad
Prelude to Building Green - IIFL Home Loan's Guide to Sustainable Affordable Housing
Download report

Disclaimer: The information contained in this post is for general information purposes only. IIFL Home Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment, etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness, or of the results, etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability, and fitness for a particular purpose. Given the changing nature of laws, rules, and regulations, there may be delays, omissions, or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Home/ Loan Against Property/ Secured Business Loan/ Balance Transfer/ Home Improvement Loan/ NRI Home Loan/ Home Loan for Uniformed Services) loan product specifications and information that may be stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Home/ Loan Against Property/ Secured Business Loan/ Balance Transfer/ Home Improvement Loan/ NRI Home Loan/ Home Loan for Uniformed Services) loan.