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Gaurav Patel made post

Can I transfer my home loan? If yes, how?

Answer
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2 years ago


Anyone who wishes to transfer his/her home loan, should keep a keen watch on the interest rates that he/she is paying. Other than this, you must also keep a look out for the various offers that banks offer from time to time.

Reasons for transferring home loan:

- You can shift your home loan to any other lender, who is willing to offer you a better deal in terms of lower interest rates.

- You might also want to increase your loan’s tenure due to financial reasons.

- You might want to transfer a loan, if you want a top-up loan on the existing loan and the present lender is not willing to offer the same.

Process for transferring a home loan

In order to transfer a home loan, you need to pay your existing or current lender first, before it releases the original documents of the property. However, your new lender will not issue a cheque, unless it receives the original property documents.

The best way to find a solution to this catch-22 is by requesting your existing lender to issue a letter to the prospective lender. This letter should mention the list of documents related to the property lying with the present lender, the outstanding loan amount, and an undertaking that the bank will hand over the property documents to the prospective lender on payment of the outstanding amount.

For example, if you want to shift from HDFC to State Bank of India (SBI), you will have to request HDFC to write a letter addressing SBI all of the above.

Then, on receiving of the letter, the new lender will also carry out a due-diligence check on the property and the customer to assess the title of the property and the repayment capabilities and track record of the borrower.

However, these are not mere formalities that need to be completed and you will get your loan transferred easily. A new lender may not be willing to transfer the loan, unless you have a good repayment history and your credit report is also good.

This means, that in the example stated above, SBI will not necessarily lend to you because you meet its requirements. Based on its own discretion it will take a call on whether to lend you any money, if at all.

This means that just by the virtue of having received a loan from one bank/borrower, you cannot assume that another will lend to you easily. This is because all banks have varying checks and balances in place in order to minimise chances of default.