Originally I had my home loan with LICHFL. I wanted to go with SBI MaxGain, (as I can park my extra cash there and earn interest on it at current home loan interest rate while having the flexibility to take out the money whenever I want), but while taking a fresh loan SBI asked for a lot of documentation, multiple trips to the SBI branch whereas LICHFL had a tie up with my builder and I wasn’t even required to leave my house even once during the whole process, an agent used to come to my home for all the signatures and any documentation required from us. So I went with LICHFL at that point of time thinking I can transfer it at a later date as that would be a much easier process.

Few pain points with LICHFL

Initial talks with SBI

After going through reddit and my personal experience, I wanted to go with SBI for the loan transfer even though there were few other PSU banks which were offering .05-.1% lower interest rates compared to SBI, but I wanted the reliability of their internet banking experience as this is going to be a long duration. So I went to the nearest SBI branch and started talking to them about the transfer and this is what the process involved. Fortunately this time around, SBI had agents for home loan process, and you need not pay them anything extra (you’ll get to know how they earn on the side from you later on in this blog) and these folks are supposed to help you through out the loan process.

  1. First thing is to get a document called LOD (List of Documents) from my exisiting bank/NBFC. Other documents can be acquired later during the application stage. Usually, this would come from “head office” (a tactic to delay the transfer), so start this process ASAP and then you can arrange other documents.
  2. Meanwhile, ready all the documents mentioned below
  3. Get valuation and legal done for the home/property
  4. Apply for home loan transfer and then for top-up

List of documents required

From applicant/co-applicant(s)

  1. Adhaar card
  2. Pan card
  3. Last 6 months payslips
  4. Last 2 years form 16
  5. Joining letter of current company
  6. Old company’s relieving letter and joining letter (for all the job changes in last 2 years)
  7. Bank statement for last 1 year of salary account
  8. Current company ID card

From old Bank/NBFC

  1. LOD (List of Documents)
  2. Loan sanction letter
  3. Loan statement for last 3 years
  4. Loan outstanding letter
  1. All link documents (basically, these documents list all the previous owners of the land for last 50-100 years or upto available)
  2. Plan & proceedings of the apartment
  3. Latest house tax reciept
  4. Sale deed of the flat

For valuation, a person visits our home and verifies whether the house actually exists or not and takes some pictures of the house and also measures the area of the house (they’re not very particular about this from what I noticed, they just verify if the measurements mentioned in other docs like registration/loan application are true). I was required to give him “travelling charges” of 500 (later got to that this is a bribe given to him, so that he doesn’t undervalue our house). For the actual valuation charges, I paid their company 6000 rupees.

Once this is done, all our docs are sent for legal, from what I understand, they verify the legality of all the documents we have provided for the home loan, the link documents and home registration documents etc, and then attest them. I had to pay them another 5000 rupees.

Both these fees, are apparently proportional to the value of the loan, i.e; if the loan amount is higher, these will also go higher. The actual fees for valuation and legal mentioned in the loan application is actually 3540 and 3500 respectively. I guess the difference is split between these people and the agent and this is how the agent earns other than the salary paid by the bank.

Applying for loan transfer

Once both valuation and legal are done, we start the application process for the loan transfer. From the valuation, you will get to know how much loan you can apply for and how much top up loan you can take. My bank gave me a couple of forms to fill, most of the fields are self-explanatory. Few fields, I took help from the assisstant manager in the bank to fill them. Once it is filled and signed by all the co-applicants, you submit it to the branch and then they start the online process. Basically, they upload all of this information in to their systems and then send it to a regional branch for final verification and then for approval.

In my case, they sent back the application to my branch saying a “deviation”, since I wasn’t working for few months in the last 3 years in between. So I had to write an explanation letter, as to why I wasn’t recieving any salary for those months. I checked with the bank manager whether to mention health reasons, since it would look better, but he suggested that it wouldn’t matter and I filled it with genuine reasons, that I intended for the break to be only 2 months but due to lack of hiring in the IT industry at that time, it took few more months for me find a new job. Then they attached this explanation letter to the loan application and resent it to the head office and then after 3 days my loan was approved.

Post approval procedures

Then on a pre decided day we go to the bank to sign all the documents. Once the loan agreement is signed it needs to be franked, so we took it to a nearby franking shop, got it franked and returned it to the bank. Franking charges were 750. Also we need to get a mortgage deed done for this loan. It was 0.5% of the loan value in our state. We didn’t need to do anything extra for this, we just paid the agent the amount for this and he took care of it. Also, it cost me around 3k just for xerox’s throughout the whole process.

So immediately a loan account was opened on my name and the loan amount is disbursed to that account. Now I got a loan outstanding letter from LICHFL on the next day, this mentions the exact loan outstanding amount for that particular day and then go to SBI to get a DD for the exact amount and then take it back to LICHFL to submit it. Once this is done, LICHFL takes 10-15 days to get the orginal home documents which are stored in their head office (in my case visakhapatnam). We’ll get an SMS & an email once they reach our LICHFL branch and we need to go along with a current bank’s representative to collect them.

Note that, both parties need to be present, i.e; loan applicant and the new bank’s representative and then the documents are directly given to the bank representative. Please make sure to go to your bank along with the rep and make sure they’re submitted to loan officer/bank manager there.

And then we follow a similar process for the home top up loan as well and it is sent for verification and then approval. Once that is also done, the amount is disbursed into another loan account created for the top up loan. One thing that was different here was, for top up loan, we needed to get estamping done for the loan agreement. It cost around 8K for me.

All the charges/payments

Expense Amount Notes
“Travelling charges” to valuation person ₹500 actually a bribe given to the person to get better valuation
Valuation fee (company) ₹6,000 For property valuation.
Legal/attestation charges ₹5,000 For document legality/link-doc checks & attestation.
Franking of loan agreement ₹750 Done at nearby franking shop.
Mortgage deed stamp duty 0.5% of loan value this can vary across states
Xerox/photocopying ~₹3,000 Cumulative across the process.
E-stamping for top-up loan agreement ~₹8,000 Specific to the top-up loan.
Loan Processing charges main loan nil waived off due to offer
Loan Processing charges top up loan ~₹3,000 50% off due to offer
CERSAI charges ₹236 2 * 118, for each loan

Things to consider/be on the lookout for

  • Agent from bank will always try to push few shady things to complete the process fatser. For ex, once he was asking me to sign where my mom’s signature was required. In these cases, it’s best always to consult bank manager/asst manager, as they always suggest the right thing to do.
  • SBI pushed very hard for me to take insurance on the laon, I was very steadfast that I wouldn’t require it and rejected it every mention of it. Note that this is different from property insurance, which is for damages like earthquake, fire etc.
  • During the final signing of the loan after approval, the SBI folks tried to sneakily make me sign on the insurance docs as well. There were more than 300 signatures required from me that day and they just slipped in the insurance docs inside another bundle of docs, but I was briefly looking at the title of every page, and caought what they were trying to pull on me.
  • And then there was pressure from them to assign my Term insurance to SBI (as I wasn’t taking their insurance), whose value is much higher than the home loan amount. I didn’t give in to those demands and politely refused at every stage. After a while they stopped bothering me about this.
  • PSUs usually ask for a mortgage deed when giving a home loan, so this will be a significant cost if loan amount is higher, so do check if loan transfer actually makes sense with this cost.
  • If you wish to take a top up loan along with the loan transfer, you can save time & money on few things (like legal & valuation), as these are freshly done and are valid upto 6 months, so need not get them done again, whereas if you go for a top up at another time, you’d have to get them done again.
  • Since it is SBI, lot of processes take time and for me it took almost 3 months to complete the entire process. One thing I’ve figured out during the whole ordeal is that, the branch manager usually has a lot of knowledge and these tellers/agents don’t know some stuff and waste our time, so at any stage if you feel it is getting delayed, just go to branch manager, they’d sort things out.
  • The old bank/NBFC, will try a lot of things to delay the process as much as possible and there’s no point going into a fight with them as it would only lead to further delays. Best thing is to just bear with them for time being until the loan is transferred.