Opting for a Home Loan Balance Transfer? Be Ready with These Documents
April 25, 2018
Brown Mark (73 articles)

Opting for a Home Loan Balance Transfer? Be Ready with These Documents

Banks take a positive approach while approving Home Loans. The primary reason is that the default rate in a Home Loan is the lowest when compared to other loans. The average Indian will always ensure that they repay the Home Loan instalments. Secondly, the Home Loan is a secured loan. As the Loan to Value ratio (LTV) is around 80% initially, the banks have enough margin in case of default. It also explains why banks are aggressively marketing their Home Loan portfolio.

The Reserve Bank of India (or RBI) has made it easier for banks because they have freed the controls on the interest rates. Now, banks can stipulate their rates depending on the cost of funds. It has now resulted in an interest rate war as banks compete with each other to offer the lowest rates. The RBI has also directed the banks not to levy any foreclosure charges on Home Loans even if borrowers switch their Home Loans to other banks.

Borrowers can Apply for Home Loan Balance Transfer (HLBT) at their convenience for various reasons. The primary reason for any HLBT is the advantage in the rate of interest. The Home Loan market is a volatile market with banks changing their interest rates frequently. Hence, an HLBT has become a common occurrence.

The procedure – Documents required for HLBT

Any HLBT will entail submission of documents. Let us see what the documents for Home Loan Balance Transfer are.

  1. Foreclosure letter – You have to apply to your existing bank and request for a Home Loan foreclosure letter. Your bank will furnish the details of the amount payable to close the loan by a particular date.
  2. List of Documents – Your banker will issue the list of title documents they hold in their custody. It will enable the new lender to proceed further.
  3. Statement of Account – You should keep the statement of account of the Home Loan for the preceding 12 months to enable the new lender to check for any defaults or delays in repayment of EMIs.
  4. Copies of all Property documents – You have submitted the original title deeds to your existing banker while creating the equitable mortgage in the bank’s favour. The new lender will require the copies of the documents to determine the genuineness of title.
  5. Encumbrance Certificate – Submission of the Encumbrance Certificate (EC) for the past 30 years is essential to enable the new lender to verify the chain of ownership of the property. Some banks ask for Property Tax paid receipt and electricity bill.
  6. Legal Scrutiny Report – Usually, you do not have any role to play in the procurement of the legal scrutiny report (LSR). The banks have their panel advocates who do a search in the records of the Sub-Registrar’s office and prepare this report. Some banks ask you to contact their advocate and obtain the LSR. Under such circumstances, you have to make the payment of the advocate’s fees. In the ordinary course, banks include this fee in their processing fees.
  7. Valuation Report – The banks ask their panel valuation engineer to visit your property and submit the latest valuation report of the property. Some banks advise you to make the payment separately to the valuation expert whereas some banks include this fee in their processing fees.
  8. KYC Documents – The submission of KYC documents is essential. Documents that suffice as identity proof include the Passport, Voter’s ID, PAN Card, Driving licence, Aadhar Card. The address proof documents are Ration card, Passport, driving licence, registered rent agreement and so on. The certificate from the employer can suffice as employment proof for the salaried employee. Self-employed persons can submit their GST registration certificate or other tangible evidence of conducting business.
  9. Income Proof documents – These documents differ depending on whether you are a salaried employee or a self-employed person. Salaried persons can submit their salary slips for the past three months, IT returns and Form 16 for the previous two years, and statement of account reflecting the salary credits for the last six months. Self-employed persons can submit their financial statements like Balance Sheet, Profit and Loss statements, IT returns, and so on for the past two years. They should also keep the statement of bank account reflecting the income credits ready for submission.

You have thus seen the documents you need to submit for HLBT. It is in addition to the application form that you have to provide to the new lender. If you have all the documents in order, it does not take much time for the banks to approve your HLBT.

Also Read : 3 Reasons Why You Should Be Refinancing Your Home Loan

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Brown Mark

Brown Mark