Home loans are a long term commitment involving large amounts of money. For common people, the amount like Rs. 50-60 lakhs means years of savings being invested in building the home of their dream. This dream needs to be taken care of regularly; otherwise, it can put a big dent in your financials. Therefore even after you have successfully availed the home loan after a year two, you must open the possibility of balance transfer for yourself.
The facility of balance transfer of home loan allows you to transfer your outstanding current loan balance to a different lender than your current one. Under this process, you take a NOC from your current lender and get a Demand Draft from the new lender on the name of your current lender for the outstanding loan amount. As the current lender received the DD, it then transfers your home documents to the new lender.
The facility of a balance transfer is most effective when there is a significant difference in the rate of interest charged between your current lender and the new lender. Some of the key benefits of a home loan balance transfer are:
- Minimum documentation is required as your home documents are already submitted with your current lender. The new lender can quickly verify the documents, and the process is hassle-free.
- No Extra charges are to be paid by you except a processing fee which may be charged by the new lender. This makes the transfer cost-effective, to say the least.
- You can avail Top-Up loan for upto 25-50% of the loan amount from the new lender as you transfer your home loan.
- Lower EMIs is one of the biggest benefits of a balance transfer. Depending upon how less is the rate of interest charged by the new lender from the old one, your home loan EMI gets reduced accordingly.
- Lower rate of interest is the primary benefit and reason for a balance transfer. However, you need to make sure that the difference is significant enough to take the effort of transferring the balance of your home loan to a new lender.
Following are the top 5 banks with their home loan balance transfer rates and processing fees:
- SBI offers the rate of interest, starting from 7.25% with the processing of 0.20% of the loan amount. The fee is subject to a minimum limit of Rs. 4,000 and maximum limit of Rs. 17,000.
- Citibank offers the rate of interest, starting from 7.35% for the home loan balance transfer with a NIL processing fee. This feature of no processing fee makes them one of the first choice of borrowers.
- Central Bank of India offers the rate of interest starting from 7.25% for the home loan balance transfer along with a processing fee of 0.50%, which is subject to a maximum limit of Rs. 20,000.
- UCO Bank offers the interest rate starting from 6.90% for the home loan balance transfer along with 0.50% processing fee, which is subject to a minimum limit of Rs. 1,500 and maximum limit of Rs. 15,000.
- Indian Bank offers the rate of interest, starting from 7.55% for the home loan balance transfer along with processing fee of Rs. 0.23% which is subject to a maximum limit of Rs. 20,381.
In today’s time, many banks are providing an extremely low rate of interest deals on home loan balance transfer which makes it the perfect time to switch to the lender with the lowest rate.