Home loan transfer, also popularly known as balance transfer is considered to be easiest way to reduce your interest payout on the existing loan. In simpler words it means, transferring your loan from your existing lender (bank) to another lender (bank) for a better interest rate offered.
This is very popular in Home Loan particularly as they are of substantial size running in lacs to crores. Hence for a usual tenure of 20 years, the total interest payout becomes very high and hence attracts borrower's interest every time he/she looks at the loan statement.
Home loan rates nowadays varies anywhere between 9 to 12% so it does make sense to either renegotiate rate of interest with your existing bank or transfer it to other bank offering a better rate.
However, one need to do a cost benefit analysis. Not always a rate reduction balance transfer will make economic sense. If your existing loan has very low tenure left or the the difference in the new rate and existing rate is not very high, such transfer can be a loss of money wasted in transaction.
The other bank consider your balance transfer as a fresh only so there would be processing fee involved & documentation fee. Also, in EMI concept initial EMI has higher proportion of interest and proportion of principal keeps increasing as you continue on payments. Hence in case of low tenure remaining, most of your EMI is going in payment of your principal taken. At this moment, taking a balance transfer will be a calculated stupidity. Home loan transfer works best when one is in his/her initial period of home loan.
Since the balance transfer is considered as the fresh loan by the other bank, its documentation & eligibility remains the same as normal home loan.