Home loan transfer has emerged as a strategic financial tactic in the homeownership arena, providing borrowers with the means to fine-tune their mortgage terms. Also recognized as a balance transfer, this process involves migrating an existing home loan from one lender to another to secure more advantageous conditions, including reduced interest rates and enhanced loan features.

This financial strategy has garnered widespread attention for its potential to elevate affordability and streamline overall loan management. Among the notable players in this arena is Bajaj Finserv, renowned for its client-centric ethos and commitment to delivering competitive financial solutions.

What is a home loan transfer and housing loan eligibility?

A home loan transfer, commonly called a balance transfer, involves relocating an existing home loan from one financial institution to another.

Borrowers pursue a home loan transfer to benefit from more favorable interest rates, decreased Equated Monthly Installments (EMIs), or improved terms the new lender provides.

The housing loan eligibility criteria:

●     Age

Salaried applicants should fall within the age range of 23 to 65 years, while self-employed individuals can apply up to the age of 75.

●     Income

For salaried applicants, a minimum monthly income of ₹25,000 is required. Generally, a higher income correlates with increased loan eligibility.

●     Employment Status

It extends loans to both salaried and self-employed individuals, provided they have a stable and verifiable source of income.

●     Credit Score

It typically considers a CIBIL score of 725 or higher ideal for securing a housing loan, reflecting a solid creditworthiness.

●     Debt-to-Income Ratio (DTI)

The DTI, representing your existing financial commitments relative to your income, should ideally be below 40% to enhance eligibility for a higher loan amount.

●     Property Value

The loan amount is contingent on the value and location of the property. Bajaj Finserv offers loans up to 80% of the property’s assessed value.

What happens to your existing EMIs during a home loan transfer?

During a home loan transfer, the existing Equated Monthly Installments (EMIs) experience a transition to the new lending institution. The following breakdown elucidates the fate of your existing EMIs:

1. Interest Component

The interest component you previously paid to the original lender undergoes recalculation based on the agreed-upon terms with the new lender. This may vary if the new lender offers a different interest rate.

2. New EMI Calculation

Upon determining the outstanding principal and recalculated interest, a new EMI is computed based on the agreed loan tenure with the new lender. This recalibrated EMI considers any alterations in interest rates or loan terms.

3.  Payment to the Previous Lender

The new lender settles the outstanding balance with your previous lender. This transaction is usually managed directly between the two financial institutions, relieving you of needing to make further payments to the former lender post-transfer.

4.  Outstanding Principal

The outstanding principal amount from your current home loan gets transferred to the new lender, encapsulating the remaining balance you owe on the original loan based on your housing loan eligibility.

5.  Commencement of Repayment to New Lender

You embark on repaying the home loan to the new lender by the terms and conditions established during the transfer. This entails making payments of the recalibrated EMI amount on the specified due date.

6. Loan Account Transition

Your loan account undergoes an official transfer to the new lender, who subsequently becomes the new lien holder on your property.

Which is the best app for home loan transfer?

Bajaj Finserv offers flexible loan terms, including extended repayment tenures, prepayment flexibility, and convenient fee structures. It tailors the loan to better suit your needs through its home credit instant loan app. Additionally, opting for a home loan transfer to them allows you to avail a top-up loan, addressing additional financial requirements and streamlining your overall loan management.

The process of transferring your home loan is simplified with them, as they strive to make it smooth and hassle-free by handling most of the paperwork and formalities involved in the transfer.

Conclusion

The home loan transfer stands out as a potent instrument for homeowners looking to optimize the financial landscape of their property ownership journey. As individuals navigate avenues to refine their mortgage structures, the home loan transfer transcends being merely a financial strategy, evolving into a pragmatic means to secure a more favorable and manageable homeownership experience.