Balance Transfer is a product which banks offer to their existing customers with the option transferring their loan outstanding to some other bank. Banks offer these products when a customer wants to shift his loan from one bank to other for the interest rates, prepayments etc., A Balance Transfer is similar exactly like a home loan with a little difference in documentation. This product demands additional documentation at the time application submission.
Let’s see what it demands and how it can be done…
The documentation of this product is similar to normal home loan product where a customer submit his personal documents i.e Id Proof, Age Proof and Address proof, Income Documents i.e Pay slips, Bank Statement & form 16, property Documents i.e Agreements, Link Documents and Encumbrance certificate while applying a home loan. Along with these documents banks ask to submit documents related to your existing loan i.e One year repayment track, Current outstanding letter and Documents deposited certificate which give details of your existing loan and your repayment habits in the present loan in the last one year.
Once all these documents are submitted banks evaluate applicant’s eligibility, property cost and check in CIBIL about his past repayment tracks and records. If all the details obtained are satisfactory and meets their policy then banks disburse the loan amount of the previous bank first in favour of the previous bank directly. Once bank receives the documents related to the loan and property it disburses any additional loan amount applied to the customer. Income Tax exemption under sec 80(c) of Income Tax Act is applicable to this product up to a maximum of Rs. 1,50,000/- towards the principal and interest paid to the home loan. This product can be opted at times when you existing bank is charging more interest rate, or pre closing and part payment charges, in case of any service related issue etc. There are certain add on product which you can add to your existing balance transfer i.e Mortgage and construction are the products which you can combine and avail from bank.
