Let us understand the difference for each of them –
• Home loan balance transfer
The primary reason why borrowers choose home loan balance transfer is due to a lower rate of interest offered by another lender. This can help reduce the EMIs, resulting in a lower total cost of the loan. With this, it is important to remember that part-prepayment can help you pay a portion of your outstanding loan principal.
• Business loan balance transfer
Business loans have become an extremely convenient way of establishing a continuous cash flow. While it might seem like a great option, there are various equation you should look at. A few being rate of interest, eligibility criteria for a balance transfer, required documents, and loan tenure.
• Personal loan balance transfer
A personal loan is often preferred by many due to its convenience of being able to use it for a family vacation or even a surgery. In fact, it is the go-to product for this purpose. With many benefits, the rate of interests could be higher and hence, you should carefully consider before choosing this option for personal loan balance transfer.
• Credit card balance transfer
A credit card is a convenient way of making purchases and paying for it later. In fact, with consistent and timely payments, cards also help get a good credit score. A credit card balance transfer is when you transfer the balance of one credit card to another. This is done mainly to enjoy low interest rates and avoid debt on the existing card. It is recommended to not use this method regularly as it can lead to poor financial choices further ahead.
Now that we have understood balance transfer and its types, let us see how we can do this process in a few steps.
- Review your existing debt.
- Decide where you want to transfer debt.
- Review the offers carefully.
- Consider the offer length.
- When it comes to credit card balance transfer, it is important to remember that transfers cannot happen with the same issuer.
- Analyse and compare your top picks carefully.
- Do the transfer fee math, add the balance transfer and see if you are actually saving money by this process or not.
- Read the fine print. Make sure there is not catch and you know the exact process without anything being hidden.
- Be aware of the deadline for the transfers.
- After carefully ticking all the above-mentioned steps, you can apply for a balance transfer for loans and credit cards.
The process does not end here, there are steps you should follow after applying for a transfer as well. Keep the below mentioned steps in mind –
- Gather information and make sure you are aware of the terms.
- Make a repayment plan keeping in mind the months you have to pay off your debt.
Here is a list of documents you will require for the process of balance transfer.
Documents you will require from your existing lender –
- Letter of consent
- No objection certificate
- Loan statement
- Foreclosure letter
- Post-dated cheques
- Property documents (in case it is a home loan)
Documents you will need to submit to your new lender are –
- At least KYC document from Voter ID, driving license, Job card issued by NREGA, Aadhaar card, PAN card.
- At least one of these as Address proof – Passport, Voter’s ID, driving license, Aadhaar card.
- Financial documents like – form 16, latest salary slips, bank statements of salary account for the last six months.
- In case of home loan, property related documents like –
Property purchased documents to prove ownership, NOC from the developer/housing society, Registration, stamp duty payments.
- You will also require documents of your existing home loan like your loan sanction letter or loan agreement, approval from existing lender, home statement till date.
What are some advantages of balance transfer?
- Lower Interest Rates
- Extended loan tenure
- Option to get a top-up
- Better terms on a loan
- Option to change type of interest rates
- Enjoy better service
Make sure that you do a checklist of all the steps and documents mentioned above to enjoy a hassle-free balance transfer process.