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Can a Home Loan be Transferred from One Individual to Another?

Highlights

  • Can you transfer your home loan to someone else?
  • Yes, you can. However, your existing loan has to be closed first.

Yes, it’s possible. If a property owner does not want to repay the loan any further, he/she can transfer the debt to someone else. But that will happen only if the owner sells the property to the new buyer and get the ownership title transferred to the latter. The owner, who can also be referred to as the seller, is required to close his/her loan first before the transfer. The seller can thus close the loan by using the money received from selling the property to the new buyer. Usually, the lender remains the same in this sort of transfer, which is termed as an internal balance transfer in the banking terminology. What are the processes involved in this transfer? Read on to know the same.

Formalities Involved In Internal Home Loan Balance Transfer

  • The buyer must request the existing property owner to present the letter showing the foreclosure of the loan in lieu of selling the property
  • The buyer must fill the home loan application form and pay the applicable processing fee
  • It is compulsory to obtain a No Objection Certificate (NOC) from the developer/authority
  • The buyer needs to submit all his KYC related documents and income proof to the lender.
  • A team of experts will carry out a legal and technical evaluation of the property as it involves the ownership transfer from one individual to another. The technical evaluation will decide the value of the property.
  • The sales consideration will be disbursed to the new buyer as the loan amount. In return, the seller will get a cheque from the lender.
  • At the same time, the seller is required to hand over the property-related documents (photocopies) to the buyer. The original ones will be there with the lender.
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What’s the Benefit of Having the Same Lender in an Internal Balance Transfer?

This means the legal & technical verification along with the credit appraisal will be much faster, leading to a faster execution of the transfer. It’s because the same lender would have all the property documents with it.

But Is It Worth Having the Same Lender from the Point of Cost?

It may interest the buyer more than the seller. After all, the buyer has to pay off the loan and not the seller from there on. So, from the buyer’s point of view, the rate of interest must be low enough to suit his/her budget. It makes for a comparison of rates, so buyer can online to do the same. The rate, even if higher by 0.50%-1% than the market rates, can make the buyer pay more. If that’s the case, it will be worth applying for a fresh home loan at a different lender, which will ask the buyer to submit a list of documents the seller must have submitted to the existing lender. The buyer could even be asked to present an interim security or persuade the seller to become a guarantor for the fresh loan. The interim security could be a house property in the name of the buyer.

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  • Home Loan Interest Rates November 2019
    Axis Bank8.90% - 9.15%
    Bank of Baroda8.40% - 9.40%
    Citibank9.00% - 9.85%
    DHFL9.05% - 9.95%
    HDFC8.25% - 9.30%
    ICICI Bank9.20% - 9.65%
    Indiabulls Housing Finance Limited8.80% - 11.05%
    Kotak Bank8.90% - 8.75%
    LIC Housing8.35% - 8.95%
    Piramal Capital & Housing Finance9.00% - 9.10%
    PNB Housing Finance9.25% - 12.00%
    Reliance Home Finance8.75% - 14.00%
    State Bank of India/SBI8.15% - 8.80%
    Tata Capital9.20% - 9.35%