How Does Home Loan Balance Transfer Work?

Category: Finance 10 0

After a lot of deliberation, one decides to avail Home Loan from a particular bank considering the rate of interest, repayment period, quantum eligibility, and pre-payment guidelines. However, after a while if you find the rate of interest and other advantages from other bank comparatively more attractive, the balance under the present loan can be transferred to another bank or financial institution.

Home Loan Balance Transfer will be considered only if a minimum of 12 EMIs for the existing Home Loan have been paid. It will also depend on the credit rating of the borrower. The lending institution may also stipulate minimum loan amount eligible for transfer.

A fresh Home Loan application with supporting documents like, address proof, photo identity proof, applicant’s photograph, income proof, bank statement, must be submitted to the new lending institution.

If you seek a lower rate of interest particularly, consider Home Loan Balance Transfer to Kotak Mahindra Bank.

Kotak Mahindra Bank is one of the leading private sectors banks in India.The bank offers a wide range of products and services to individuals and commercial enterprises.

The bank offers Home Loan Balance Transfer at competitive interest rate. Eligibility criteria stipulated by Kotak Mahindra is rather strict only to ensure that the facility is provided to the right person. They also ensure that the EMI stipulated does not overburden the borrower and he/she has enough funds left for subsistence.

Reasons To Opt For Kotak Mahindra Bank Home Loan Balance Transfer

  • Competitive rate of interest and interest charged on reducing balance
  • Simple documentation
  • Door step service
  • No pre-payment charges
  • No hidden charges

The bank will transfer the balance outstanding to the existing bank in full and will take over the liability as per the terms finalised with the borrower.

Features of Home Loan Balance Transfer:

Eligibility:

  • Salaried and self-employed professionals, Hindu Undivided Family
  • Age: 18 to 60 years for salaried individuals and 18 to 65 years for self-employed professionals
  • Nationality: Resident Indian
  • Income: Minimum Rs.20,000/- p.a. for resident individual in Delhi, Mumbai, Bangalore, Pune and Chennai and Rs.15,000/- p.m. in other cities.
  • Income for self-employed professionals and Hindu Undivided Family -Rs.2,40,000/-p.a. in Delhi, Mumbai, Bangalore, Pune and Chennai and Rs. 1,80,000/-p.a. in other cities.
  • Karta of the HUF should either be applicant or co-applicant and should have been in existence for past 3 years.
  • Partnership firm/LLP/Company should have been existence for past 3 years

Quantum:

  • 90% of the value of the property

Repayment:

  • 20 years or remaining tenure of the existing loan whichever is lower.

Interest:

  • Set at the discretion of the bank and varies from time to time.

Factors that affect the eligibility criteria:

  • Salary: Salary requirement as stipulated by the bank has to be met with. Sometimes the salary availability may be as per the bank’s requirement but the net take home salary after deduction of EMI for the proposed loan may not be sufficient. In such cases the application will be rejected.
  • Credit Score: The first step taken by the bank is to draw credit score of the applicant. Credit score is based on how regularly earlier loans and credit card payments serviced. This data is available withcredit bureaus operating in the country. If credit score is less then there are all chances of the loan application being rejected by the bank.
  • Credit report will indicate any discrepancies in credit history of the applicant. Any remarks like ‘settled’ or ‘written off’’ in the credit report indicates that the applicant has been defaulting in payment of loan and the lender on realizing that the payment will not come through has settled the account. In such cases the Bank will reject the loan application.
  • Job duration: The applicant should have completed at-least 6 months to1 year service in the present job on the date of applying for the Home Loan Balance Transfer.
  • Employer should be in the approved employers’ list of Kotak Mahindra bank. Otherwise it is presumed that the applicant does not have a secure job and so the repayment of loan is uncertain.
  • The documents pertaining to the property should be free of any legal issues. For this, legal opinion of the Bank’s panel advocate will be obtained. If the legal opinion is good then the application will be processed further, else, it will be rejected.
  • These days many of them opt for joint borrowing under home loan only to enhance the eligible quantum of loan. This can be an advantage and at the same time if the credit score of the co-applicant is not satisfactory, the application will be rejected.
  • If the credit report shows a number of credit enquiries made, then the reliability of the applicant comes down. As per the bank if there are multiple credit enquiries it means that the applicant is constantly in search for loan options and the finance management is bad. In such cases the loan application will be rejected.
  • If the applicant is already a guarantor for any other loan it will be an added financial burden if the original borrower does not repay the loan. Home loans are heavy investments and the EMI will also be high. If the applicant is already having financial commitment then chances of not being able to service the present loan are higher. Hence the loan application will be rejected.

Documentation Required

The documents to be submitted are as listed below:

  • Fully filled application form
  • Proof of address
  • Photo identity proof
  • IT returns/ Form 16 of previous two years for salaried individuals
  • 6 months bank statement
  • IT returns of previous three years for self- employed professionals
  • Property tax paid receipt
  • Proof of business address
  • Copies of property documents with earlier agreements of sale
  • 3 passport size photographs

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