Everything You Need to Know About Internal Balance Transfer of Home Loan
Jun 18, 2019 Home Loan
The home loan rates keep changing as the market scenario changes. Borrowers who have taken a floating rate of interest surely get advantage when the home loan interest rate reduced, but the ones who have opted for a fixed rate of interest are not fortunate enough. However, there are provisions with which one can transfer their home loan to a lender who is offering a lower rate of interest.
There also exists a provision of internal balance transfer of the home loan. Most people are not aware of the same, and we discuss it here.
If you are a homeowner with a home loan repayment still going on and you are willing to sell of the said property. If the buyer is taking the home loan from the same bank you are servicing the home loan for the property; it is called internal balance transfer of the home loan. It is not the transfer of the existing home loan but the transfer of the ownership from existing home loan borrower to the new borrower.
Requirements for internal balance transfer of home loan:
There also exists a provision of internal balance transfer of the home loan. Most people are not aware of the same, and we discuss it here.
If you are a homeowner with a home loan repayment still going on and you are willing to sell of the said property. If the buyer is taking the home loan from the same bank you are servicing the home loan for the property; it is called internal balance transfer of the home loan. It is not the transfer of the existing home loan but the transfer of the ownership from existing home loan borrower to the new borrower.
Requirements for internal balance transfer of home loan:
- A request letter from the existing homeowner, stating that they are selling the property.
- A duly filled home loan application form from the new buyer.
- A NOC from the developer or the authority.
- The existing home loan must be closed with the proceedings from the newly sanctioned home loan amount.
- If the seller has chosen a floating rate of interest, then there can be pre- payment of home loan penalty.
- The sale price or the remaining amount must be paid to the seller of the property.
Steps to transfer the internal balance of home loan:
Even though the bank or the lender is the same, the applicant is new and therefore, the bank will go through their procedure of the home loan approval. If the new buyer is willing to take the home loan for the property that the seller is still paying the home loan for, the bank would want the seller to settle the outstanding balance first.
- Taking the home loan from the same bank has the advantage; the bank will only have to look into the finances of the new home buyer.
- The time taken for approval will be less because all the mandatory documents are with the bank itself.
- The seller will get a letter from the bank stating the outstanding loan and the property documents that are with the bank.
- The seller provides the property related materials to the buyer.
- The new buyer then resubmits them to the bank.
- The bank looks into the eligibility of the buyer and approves the loan and then disburses the home loan amount in favour of the seller.
Legal and technical verification
Since the property is now transferred to the new buyer, the legal check is necessary. Technical verification is also required to evaluate the cost of the property. The lender will have to adhere to loan to value ratio norms before giving out the home loan.
Since the property is now transferred to the new buyer, the legal check is necessary. Technical verification is also required to evaluate the cost of the property. The lender will have to adhere to loan to value ratio norms before giving out the home loan.
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