Deutsche Bank

Balance Transfer


In order to get some benefits from the changing interest rates, most of us opt for a home transfer loan. The term can also be re named as the refinancing or balance transfer.

While, the present borrower who is about 2 or more years into his loan term period with a bank, fails to acquire any paybacks from these dropping interest rates. However, RBI has been continuously insisting on the fact that all the existing borrowers should also be allowed to benefit from these lower interest rates but in reality, it doesn’t happen.

Such individuals could discuss with their bank on re- negotiating the Interest Rates based on the superior refund track record etc. if the bank is not saying yes to their request, then they could move to a bank that OFFERS a lower interest rate and better terms on the loan.

In order to start your loan process, the first thing you need to do is to submit a letter to the present lender demanding a loan transfer. Depending on your call, the bank will immediately OFFER you a permission letter or what is called a non objection certificate (NOC) along with an official statement citing the outstanding total.

And the moment you are done with your legal procedures your property documents will be handed over to the new lender, the outstanding post dates cheques/ ECS will get cancelled.

Your new bank will certainly offer you the home loan based on the current interest rates.

Prepayment fee is charged according to the present lenders terms and conditions and varies anywhere between 2 to 5% of the outstanding loan value at the time when you request for a loan transfer.

However, NHBs and some banks including ICICI and SBI have lessened or even waived this fee, but some banks could still charge some penalty amount.

Along with all these steps, you should always keep in mind that you can always bargain on a floating loan because both RBI and NHB don’t support the prepayment fines charged on the floating loan interest rates. You can also negotiate from the new lender to give you some rebate on the processing fee. The fee generally ranges between 0.5% to 1% of the total applied loan amount. Some banks limit this amount to Rs. 5000.

Some additional points to be kept in mind are that you can also check with your existing bank on the possibility of extending your loan period.. Secondly, if the value of your home has increased then you can always ask for a top- up loan and if your current lender refuses the asked top-up, then you can hunt for a new lender and start the process of Balance Transfer.

Balance Transfer

It means transferring the existing loan from one bank to another bank . Most bank charges 2 to 3% as foreclosure penalty ,but still in many cases after paying this penalty its beneficial to transfer the loan.
Common Reason for balance transfer are :
• Better rate of Interest: This is the main reason for a borrower to opt for a balance transfer of its existing loan.
• Top-up Loan: Second biggest reason for balance transfer is requirement of additional funds over and above the existing loan. This is common in cases where a top-up loan has been refused by the existing bank.

Product features :
• Max Top up - 60% of market value of property which includes existing loan amount.
• Tenure – 1 to 15 years
• Interest rate – As applicable . Interest rate keeps on changing .
• Age limit - max 65 years for salaried or retirement age whichever is earlier and 70 years for self employed.
• Loan foreclosure penalty - Means paying off the complete loan at one go. Most bank charges 2 to 3% of principal outstanding
• Income tax benefit - principal repayment upto 1 lac under section 80(c) and interest repayment upto 1.5 lacs under sec 24.
• Co-applicant - Most of the banks ask for co-applicant.
Co-applicant in case of
• Individual - spouse,parents
• Director - spouse , parents , pvt ltd company , other directors.
• Partner - spouse , parents , other partners.
• Co-owners of property need to be co-applicants in loan.
Loan process

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