How to refinance your home loan

Transferring an existing loan to another lender, also termed as refinancing, can help you get better interest rates and more convenient terms of repayment.

Here’s how to go about transferring your loan to a new lending institution.

Eligibility

This facility can be availed of if these conditions are met:

1. Minimum number of EMIs have already been paid by the customer.
2. The property is ready to occupy or already occupied

Approach the bank or lending institution
To transfer the home loan, you need to apply to your current lender with the following documents:

• No objection letter along with a foreclosure letter.
• Home loan repayment history
• List of your home loan related documents in the bank’s custody.

Apply to new lender
Fill up a home loan application form and submit along with:

1. Proof of address and age, and photo for KYC
2. Proof of income
3. Documents issued by the previous lender The new lender will review your credit history and sanction the loan

Charges
This process can entail additional charges like home loan processing fee, which must be taken into consideration while evaluating benefits of the transfer. Once the documents are approved by the new institution, a cheque of the outstanding amount addressed to the new lender is issued in order to foreclose the loan. Once payment is received, the existing institution will hand over the original documents.

Points to note
1. Work out the benefits of the tranfer after taking costs into consideration.
2. A balance transfer of home loan can help the customer reduce the EMI or avail of an additional top-up loan

The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.