Home Loan Balance Transfer

Process of transferring your loan from one bank to another is popularly known as Home Loan Balance Transfer.
Interest rates and charges are as per the prevailing home loan rates and charges.

Home Loan Balance Transfer Process

  • Check if you are eligible to transfer the loan
  • Decide if you want to transfer your loan; Calculate net savings
  • Initiate and complete the home loan transfer process

Step 1:- Who is eligible for Home Loan Transfer?

  • Individuals within the age of 21 to 65 years
  • Borrowers with a running home loan, on which 6-12 EMIs have already been paid
  • Borrowers with no history of default or delays in EMI payments on existing home loan

Step 2 :- How to calculate the savings on Home Loan Balance Transfer?

Calculate net savings on home loan transfer using MyLoanCare’s Balance Transfer Calculator

Benefits – Savings on interest expense by switching to lower interest rate loan

Cost –

  • Prepayment charges, if applicable, to be paid to existing bank
  • Processing fees and other legal/technical charges to be paid to new bank

Savings – 

Net Savings = Benefits – Cost of loan transfer

Net Savings = Low or Negative, Don’t Transfer

Net Savings = Positive, Transfer Your Loan Today

Step 3 :- How to transfer your Home Loan?

  • Compare and select the best home loan bank offer at www.myloancare.in.
  • Apply online for home loan transfer to the new bank at www.myloancare.in.
  • Request for a No Objection Certificate (NOC) and foreclosure letter to your existing bank.
  • Submit KYC, income, property and loan statement to the new bank for appraisal.
  • Sign loan agreement and pay processing charges after receiving sanction from new bank.
  • New Bank to disburse the outstanding loan amount to your existing bank.
  • Existing Bank to transfer the custody of your original property documents to new bank.
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Top 5 questions to ask from your home loan service provider

A house is the most valuable asset in everyone’s life. If you’re planning to take a loan for the same, then it is good to know about your loan’s term and conditions before you sign the dotted lines:

Here are some tips for the same:

Rate of interest: Rate of interest will depends upon loan amount, your profile, your property type, it’s market value and prevailing market interest rates. Hence you must check applicable rate of interest from multiple banks before you finalize the same. Check Home Loan Interest Rates in India.

Lender type: Is your lender a bank / NBFC. Banks rates are based on base rate. However NBFCs rate are based on PLR (Prime Lending rates).

Rate Spread: In case of floating rate loans, the applicable interest rate is sum of base rate (decided by bank) and spread. Hence whenever base rates are changed, applicable rates are automatically changed (in fixed spread cases). Hence one must know the spread being offered by bank and spread type (is it fixed or variable)

Processing Fee: Depending upon the loan amount and customer profile, some lenders are ready to negotiate the processing fee. Hence, we highly recommend negotiating hard on this before finalizing the deal.

Pre-payment / Part payment penalties: In case of floating loans, generally there is no penalty for pre-payment and part payment. However it is better to get it clarified from the lender. Also in case your loan is fixed for some time, it is highly recommended to know about the penalties before-hand.

 

How Banks Calculate Your Home Loan Eligibility?

Today we will talk about how to calculate how much loan amount you are eligible for. We will talk about how different banks calculate loan eligibility and what are the different parameters which can directly affect your loan eligibility.

The principles used are similar for all types of loans like home loan, car loan, personal loan and loan against property but the calculation differs based on type of loan.

What is Loan Eligibility?

Loan eligibility implies how much money you get from a bank for purchase of your home or against a property you already own or for any other purpose. Your loan eligibility is calculated based on the formula which we discuss with you in this article.

How Banks Calculate Your Home Loan Eligibility

How does the bank look at you at the time of sanctioning a loan?

To understand more about loan eligibility, let us think from a lender’s point of view for a minute. Think as if you are a lender and you are giving money to a person.

Major Factors Which Affect Your Loan Eligibility:

  1. Your monthly income:

First question you will ask a borrower – how much money can he pay as EMI every month.  This depends upon his income and his expenses. You will also want to know how regular or sustainable the income flow is.

It is a simple fact that higher your monthly income more is the chance of your being easily able to pay a larger EMI. Since you also need to meet your regular living expenses, it is fair to say that you can pay only a portion of your income, and not your entire income, as EMI.

  1. Past credit history:

Your past loan repayment record and credit history also determine your loan eligibility. If a person has a bad credit card repayment record, then he/she is categorized as a high risk customer. Either he faces genuine hardship in being able to pay EMI or has been a willful defaulter. In either case, banks are quite wary of lending to such people.

  1. Age of the loan applicant:

Age of the loan applicant also affects loan eligibility. Banks have to ascertain that for how many years you can pay the EMI. A person in his 30’s can pay the loan for next 30 years, but a person who is in his 50’s will retire at 60 years and hence he has less than ten years to pay back his loan.

  1. Profession:

Profession of the loan applicant also determines his/her loan eligibility. Banks want to ascertain if the income flow is regular or not. Some professions such as software developer, doctors, banking jobs are eligible for a higher loan amount as compared to those people who are working in BPO sector.

  1. Your past relation with bank:

Many banks (especially PSU banks) look at your past relationship with the bank and decide your loan eligibility.

  1. Employer category:

All the major banks have categorize big companies into A, B, C categories and provide them different interest rates. So, employees of Cat A companies may be offered better interest rates as compared to others. You need to check about this information with the respective banks which matters a lot in the long-term.

Useful Tips to Increase Your Home Loan Eligibility

Sometimes, people looking for a home find that the total home loan amount for which they are eligible is insufficient for buying their home. In such a situation one has to look for means of increasing the eligible loan amount.

There are many different ways in which one can increase the eligibility amount for home loan. In this article, we will share some of the useful tips through which one can increase home loan eligibility.

  1. Opt for a longer tenure:

The home loan eligibility is calculated on the basis of how much money one is able to afford as EMI every month. By increasing the loan tenure, the amount of loan increases.  The maximum loan tenure available depends upon two factors – borrower’s age and the maximum loan tenure offered by a bank.  Different banks offer maximum loan tenure of 15 to 30 years on home loans.

  1. Repay Existing Shorter Duration Loans:

If one has other outstanding loans, say a car loan or personal loan or an old home loan with balance loan tenure between six months to five years, the eligibility for fresh home loan will be lower due to lower incremental EMI servicing capability. So, by paying off these loans, the loan amount will increase significantly.

Useful Tips to Increase Your Home Loan Eligibility

3. Add Other Earning Family Members as Co-applicants:

One can add direct family members earning more than Rs. 25000 per month and not older than 60 years as co-applicants. In such a case, their income will also be counted towards determining home loan eligibility. Eligible co-applicants are spouse (husband/ wife), parents, sons, unmarried daughters, brothers and unmarried sisters.

These are some of the easy and legitimate ways to increase your home loan eligibility.

Home Loan in Mumbai

Home Loan in Mumbai for ICICI, PNB, HDFC and other Banks

Mumbai has a reputation that may shock some – while home to 16 million people, 60% of the very same people are actually homeless, that is while they stay in Mumbai, they don’t have a proper shelter and stay in slums.  That’s largely because Mumbai is among the most expensive housing markets in the world.  Even with their sky high salaries, banking and corporate executives find buying homes in Mumbai expensive.  Thankfully, there are multiple options of homes available in Mumbai.  While those located in south or central parts of the city tend to be more expensive, there are more affordable options available in eastern suburbs and up north, away from the central business district.

Read:

Mumbai is a vibrant market for home loans and contributes the largest proportion of high value home loan transactions compared to any other city in India.  With headquarters of most large banks situated in Mumbai, the city is among the most preferred destinations for home loans for banks.  Given the predominance of salaried individuals among home loan borrowers, banks offer some of the finest interest rates on home loans in Mumbai.  With its well organized system of property registration, Mumbai property transactions are mostly not so difficult.

Home loan in mumbai

However, Maharashtra (the state of which Mumbai is the capital city) imposes a 0.2% stanp duty on all mortgage transactions in the state.  Hence, borrowers must bear the burden of this levy when they take a home loan.  Note that in case a borrower decides to transfer his/ her home loan to a new lender, the stamp duty must be paid again. Under Maharashtra Apartment Ownership Act, permission to mortgage flat for availing home loan must be obtained from the society (or from builder in case of under construction flats). Thus, it is always preferable to compare best offers of multiple banks before finalizing a home loan in Mumbai. So, choosing the correct home loan at first instance is important and that’s where MyLoanCare helps Mumbaikars compare, select and apply loans online and conveniently through its online platform.

If you are looking for the best home loan service in Mumbai, contact 0124-4264004.

Home Loan Interest Rates for ICICI, HDFC, PNB Bank

Determinants of interest rates

Taking a home loan entails contracting a significant long term liability for the borrower in the form of monthly installments (EMIs) for a fixed tenure. Any increase in home loan interest rates increases the burden of debt servicing for the borrower as reflected in an increase in EMI or as in increase in tenure. Hence, it becomes pertinent that a home loan borrower understands the factors that determine the home loan interest rates.

Read more:

  1. Loan Eligibility Calculator – Home Loan, Loan Against Property Online

A bank will charge an interest rate which is higher than its overall cost of funds. Hence, understanding the key component of cost of funds for a bank is critical in assessing the structure and likely quantum of interest rates. Cost of funds for a home loan provider is dependent on the following factors:

  • Repo rates as fixed by RBI and announced in quarterly monetary policy: The Repo Rate announced by RBI is the single most important parameter that determines the cost of funds for banks. Repo rate is the rate at which RBI provides short term loans to banks. Any increase in Repo rates by RBI typically leads to banks increasing the interest rates for their borrowers, including home loan customers.
  • Regulatory Cost determined by RBI’s monetary policy: In addition to repo rates, RBI uses CRR (Cash Reserve Ratios) to manage the liquidity in the financial system and regulate the rate of inflation in the economy. CRR represent the minimum % of cash balances that banks are mandated to maintain as a % of their total liabilities. Cash balances carry zero interest rates and hence, a higher CRR translate into higher cost of funds for a bank.
  • Quantum of CASA (Current Deposits account and Savings Deposits account) deposits for a bank: Current Deposits with a 0% interest and Saving Deposit with a 4% interest rate typically entail a significantly lower interest expenses for banks as compared to Time Deposits with interest rates as high as 8-9%. Further, CASA funds carry a fixed rate of interest and are relatively stable source of funds for a bank. Hence, banks with a high level of CASA as a % of their total deposits will typically have low cost of funds and would be able to lend at lower interest rates.

Home loan interest rates

There are other components that get added to banks cost of funds for calculating home loan interest rates. These components include a bank’s cost of operations (which include expenses such as salary costs, distribution and marketing costs, technology costs etc.) and a credit risk premium which the bank charges to cover the risk of default from a certain % of its borrowers. The credit risk premium is a function of the underlying collateral (which in the case of home loans is the residential property owned or being purchased by the borrower) and an assessment of the credit profile of the borrower.

Credit profile of the borrower is dependent on the occupation (self-employed vs. salaried), income and expenditure level of the borrower and past repayment track record of the borrower. Finally, the bank adds its profit margin to calculate its home loan interest rate i.e. the rate at which it will give home loans to its customers.

In essence, the home loan interest rate has a multi-layered structure and is influenced by multiple factors. It would be beneficial and hence, advisable for a home loan borrower to be able to understand and analyse the likely impact of each factor on their cost of borrowing i.e. rate of interest on their home loan.

More information about Home Loan Interest Rates in India