Hurdles in Availing Home Loan Balance Transfer

Splurging home loan to the homeowners has turned out to be one of the major sources of business. The attention for all prospects is offered at an extremely lucrative interest rate along with plenty of add-ons like life insurance, motor insurance, etc. This is called divesting portfolio and in today’s environment businesses do a lot of things to stay ahead and in order, also to leverage sources of income. Bank Loan Transfers have been initiated in the market by all major banks that hold the power to borrow Home Loans to switch banks. This is a lucrative aspect that can be leveraged by the borrower as it may offer him or her a chance to save some money and be a beneficiary in the process for several benefits offered as add-on services by the new bank.

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To avail home loan balance transfer and top up, you will be asked to fill out an application form along with the proof of necessary calculations. This is processed by the new bank or some financial institution that will ultimately lead to diminished monthly repayment amounts and better quality of service.

Though the process appears simple superficially, intricately it holds a lot of things, which act as hurdles in home Loan balance Transfer and top up. Here are some of the common hurdles faced by people during the process:

  • Highly time-consuming and complicated: The bank almost always takes a very cautious approach and will provide you tons of application forms to fill accompanied with an extensive and exhaustive list of documents that require furnishing. After this phase comes the major difficult part where scrutiny happens post which the process gets all the more complicated. Hence it is always suggested that before you decide to go on-board with a bank for a loan transfer, understand the pros and cons of indulging with a bank.
  • A one-sided risk for the bank or financial institution: The bank may at times reject your loan application as no real advantage is going to be leveraged by the bank. The person might be presented with a better rate of interest, but the transfer of ownership doesn’t happen to the bank, this seems inconsequential to the bank.
  • Levying a Signing fees: Along with the challenging paperwork, the banks might also charge you a fresh processing fee that varies from banks to banks. Before signing on and agreeing to any term, ensure that the savings that you hold support that fee well which will be incurred. If the savings are not considered after switching it makes absolutely no sense going through this hard work again and again.
  • Previous banking institutions or financial institution may cause troubles: Rarely does it happen, but it may happen that the bank which is going to lose one of its customers would try to create some hurdles and try and delay your departure. It is mandatory for you to obtain a no objection certificate from the previous bank, hence it can pose as a trouble.

Home Loan Balance Transfer

Home loan balance transfer and top up requires a clear understanding between bank and borrower. The co-borrower must also approve of the switch in bank loan. Co-borrower might be staying in some other country or city in that case he/she won’t be attending the formalities that require presence of both the parties. Since, the new lender will consider you as their new joined customer you will have to ensure you follow all the related procedures and fill all the forms again. The task may seem tedious but be sure to follow the rules and righteously fill forms.

How Balance Transfer of Home Loan is Beneficial for You?

What is Balance transfer of home loan?

It can be defined as an important financial tool that can help to minimize the burden of EMI’S. It is usually initiated when the complete unpaid principal loan amount is transferred from one to another lender for a lower rate of interest. These lenders may be banks, other financial institutes etc. Generally, all the banks offer such facilities. If one is capable of paying the EMI’s regularly, then it is all sorted and the process becomes easier. It works best if you are in the initial stages of your home loan.

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While making the decision to go for a balance transfer of home loan, few essential factors needs to be kept in mind. It becomes crucial to analyse the lenders who are involved with offering the home loan balance transfer. You may choose to go for deal that seems to be appropriate in terms of the cost effectiveness as well as is a time saving option.

Here mentioned are some of the benefits of Home Loan Balance Transfer to other bank:-

  • It helps to lower the monthly payable EMI since there is a transfer of home loan from one lender to another lender. The reduction in the EMI can be quite relieving.
  • It provides an opportunity to save money. This is because it brings about a reduction in the interest rate at which the home loan is offered.
  • Transferring your home loan can also prove to be of great help as far as increasing the credit score is concerned.
  • While you opt out for a home loan balance transfer you can choose as per your suitability and also make the needed negotiation with your new lender.
  • In case of a home loan balance transfer, one can also make changes in the tenure period with the new lender.
  • No processing fees are included in Home Loan Balance Transfer and the new bank will strive to provide you with the better customer service.
  • While transferring home loan the financial institutions can offer top – up loan too. It can be availed at lesser rates and you can make use of them to pay off the debts.


After an overview of the benefits, the conclusion that can be derived is that the home loan balance transfer is a very useful financial tool offering higher tenure of the home loan. With this tool, the home loan burden can be reduced to some extent, because through this availing relatively low rate of interest is possible. A low rate of interest makes it a popular choice amongst the business entities or individuals.

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Anyone who wishes to utilize this financial tool should firstly analyze the internal rate of return from the transfer. In those cases, where the amount to be paid is lower it is always better to keep away from the home loan balance transfer. This is particularly because a person might mistakably pay a much higher amount of money in comparison to the lender. This might not be a correct financial decision in such scenarios. In fact, it can result in losses to the business.

While in the financial situations, where the unpaid amount of loan is really high and the person is in the initial stages of the loan, the deal is good enough, opting for Home Loan Balance Transfer would be the right financial decision.

You should maintain a good track record of repayment with the current lender whenever you wish to go for home loan transfer.

Always remember that a meticulous and correct decision with regard to the finances can benefit you in a number of ways. So, think before deciding on using any financial tool.