Home loan takeover process by banks explained

The first item a bank which shows interest to takeover of loan from another lender is to verify the statement of existing Home loan account as well as statement of SB account maintained by the proposed borrower in the existing bank. Do remember that loan transfer is only possible when borrower is regular in loan repayments to his/her current bank. Secondly, there shall be a convincing reason why the borrower wants to transfer the loan from the current lender. There may be several reasons where the borrower wants to transfer his/her loan account to another lender. The reasons may be that the existing bank/lender is not ready to release the additional loan (top-up loan), lower interest rates in the prevailing market to which current lender do not agree to reduce the interest rate, or the current lender is not ready to enhance the repayment period so as to reduce the EMI etc.

Once the borrower decides to transfer his/her loan account to another bank, he/she has to request the present banker to issue consent letter/NOC for transferring the loan account to the bank which is ready to take over the loan. The existing banker needs to issue a letter of confirmation to the new lender about the list of original title deed documents held by them and also give an undertaking that the bank would hand over all those documents to the new lender on closure of the loan with them.

The takeover loan will be treated as fresh loan by the new lender. The entire process like physical verification of the property, legal opinion on the property, valuation of property by the panel’s valuer, CIBIL report, credit appraisal which includes evaluation of repayment capacity of the borrower for enhanced limits will be done again as a fresh proposal .For the sanction of take over limit, the borrower has to pay again for processing fee, professional charges of lawyer, valuer fee etc. at the new bank.

Tips to borrowers: A borrower should be careful about teaser rate of interest on housing loans offered by some lenders. Check the teaser loan terms and condition, before deciding to transfer the existing housing loan account to other bank. Teaser rate remain for limited period which will be subsequently adjusted to higher rate of interest. In such cases, you may incur substantial loss on account of transferring the loan amount  to other bank by way of payment of processing fee, legal fee, valuation fee etc. again and also payment of  premature closure charges levied by previous lender.

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