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Home Loan Balance Transfer
4.7 / 5 (658 Reviews)

Home Loan Balance Transfer is a facility that allows you to transfer your outstanding home loan to a new lender for a lower interest rate or better loan terms. The lower interest rate availed through balance transfer helps you save substantially on the overall interest payout on your existing housing loan. This facility is especially beneficial for those who took housing loans at higher interest rates and now are eligible for much lower rates.

As a housing loan usually involves a large amount and long tenure, repaying it can be difficult if you took it at a higher interest rate. In such cases, transferring your housing loan at a lower interest rate can help you save big on the total interest costs and reduce your debt burden. Therefore, before jumping at the first balance transfer offer you get, check and compare home loan balance rates of top lenders as below: 

Interest Rates (% p.a.)
Name of Lender Up to Rs. 30 Lakh Above Rs. 30 Lakh & Up to Rs. 75 Lakh Above Rs. 75 Lakh
State Bank of India 6.70-7.65 6.70-7.75 6.70-7.85
HDFC 6.70-8.45 6.70-8.60 6.70-8.70
Axis Bank 6.75-11.50 6.75-11.50 6.75-11.50
ICICI Bank 6.70-7.55 6.70-7.55 6.70-7.55
Kotak Mahindra Bank 6.55 onwards 6.55 onwards 6.55 onwards
PNB Housing Finance 6.99-12 6.99-12 7.15-12
Punjab National Bank 6.55-7.95 6.50-7.65 6.50-7.60
Bank of Baroda 6.50-8 6.50-8 6.50-8.25
Union Bank of India 6.40-7.60 6.40-7.65 6.40-7.65
IDFC First Bank 6.90 onwards 6.90 onwards 6.90 onwards
L&T Housing Finance 6.75 – 7.75 6.75 – 7.75 6.75 – 7.75
Bajaj Finserv 6.70-14 6.70-14 6.70-14
Godrej Housing Finance 6.49 onwards 6.49 onwards 6.49% onwards
Tata Capital 6.70 onwards 6.70 onwards 6.70 onwards
LIC Housing Finance 6.66-7.85 6.66-8.05 6.66-8.05

*T&C Apply

Note: Home loan balance transfer interest rates as of 24th December 2021. The balance transfer rates in the table are subject to the credit/ risk profile as assessed by the lender on the basis of parameters such as credit scores, age, and repayment capacity of the applicant. The interest rates in the table are subject to change anytime without prior notice.

Home loan borrowers must refinance their home loans for: 

  • Lower Interest Rate: You might have had to take a home loan at a higher rate of interest. But if your current credit profile makes you eligible for lower home loan interest rates, you must consider transferring it.
  • Maximum Tenure: Many lenders allow balance transfer customers to opt for maximum repayment tenure. While extending loan tenure leads to lower EMIs; however, it also results in an increase in the overall interest costs on your home loan. Hence, choose home loan tenure after careful consideration.
  • Top-up Loan: Home loan borrowers opting for balance transfer also get a provision of a top-up loan with the home loan balance transfer. The top-up loan amount may vary from one lender to another; however, it can be used to meet any personal or professional requirements.
  • Additional Benefits: Depending on your new lender, you may get to enjoy better loan features such as EMI waivers, zero processing fees, etc.
  • Better Services: If you were not satisfied with the services offered by the current lender, a home loan balance transfer can be your chance to go for a lender offering lower rates and better services.

Whether you are eligible for a home loan balance transfer depends on multiple factors such as your repayment capacity, current age, credit score, repayment record, etc. The following are the indicative eligibility criteria for home loan balance transfer:

  • Your property must be ready to occupy or already occupied
  • You must complete at least 12 home loan EMIs with the current lender
  • There should not be any outstanding dues on your existing loan

Read Also:- Eligibility Criteria for Home Loan

  • KYC Documents: PAN card, Aadhaar Card, and Proof of Residence
  • Proof of Income: Salary Slips and Form 16 (for salaried), last 3 years ITR along with financials (for salaried, self-employed, and professionals), and last 6 months’ bank statements
  • Additional Documents: Latest principal outstanding letter, list of documents from the existing financier, and repayment track record

The home loan balance transfer process usually involves the following steps:

Step 1: Shop around for balance transfer offers with other lenders and compare their interest rates along with their features, benefits, processing fees, and other charges.

Step 2: Weigh the cost-to-benefit of the balance transfer taking into account all costs associated with the transfer. Also, before going ahead, ensure that the benefits outweigh the costs.

Step 3: Once you get a better deal, negotiate the terms with your current lender to see if they can offer you the same or better loan terms.

Step 4: Once you decide to go ahead with the transfer, get NOC (No Objection Certificate), foreclosure letter, loan repayment record, and property documents from your existing lender.

Step 5: Start the home loan application process with the new lender by submitting the application form and all other required documents.

Step 6: Get a sanction letter and sign the loan agreement with the new lender.

Step 7: Now your new lender will pay off your outstanding home loan amount (that you had to pay to the previous lender) by transferring the amount to your previous lender through cheque/ demand draft.

Step 8: Once the previous lender receives the outstanding loan amount, they will cancel all the cheques and ECS and close your home loan account.

Besides the interest rate, there are various other costs involved in transferring a home loan. Two of the important charges that home loan borrowers must look into before going for a home loan balance transfer are as below:

  • Foreclosure: These charges are paid to the existing lender for closing the loan before completion of your loan tenure. These charges are nil on floating-rate home loans. However, for fixed-rate home loans, these charges may go up to 4% of the principal outstanding.
  • Processing Fees:  These charges must be paid to the new lender for the processing of your new home loan application (on transfer) and may range up to 6% of the loan amount.

The table gives you an illustration of how transferring your home loan can help you save on the total interest payable:

Particulars

Existing Loan

New Loan

Outstanding Balance

Rs. 20 lakh

Rs. 20 lakh

Interest Rate (p.a.)

9.5%

6.7%

Remaining Loan Tenure (years)

15

15

Monthly EMI Payable

Rs. 20,884

Rs. 17,643

The difference in EMI Payable

Rs. 3,241

Total Interest Payable

Rs. 17,59,210

Rs. 11,75,704

Total Savings

Rs. 5,83,506

 

Note: The above-stated values are for indicative purposes only. Actual values, calculations, and interest rates may differ.

If you want to know how much you can save on your home loan transfer, use any of the free online home loans refinance or balance transfer calculators. Based on the inputs, this calculator will help you know savings in home loan EMIs and the total interest payable if you opt for a balance transfer. Make the comparison, analyse its feasibility before going ahead with the home loan refinancing.

  • When is a home loan balance transfer a good idea?
    Ans. The key reason for transferring a home loan from one lender to another is to benefit from a lower interest rate provided by the new lender.
  • Is there a limit to the amount I can transfer?
    Ans. Yes. The maximum balance transfer amount is equal to the outstanding amount of the home loan.
  • When should I not consider transferring my home loans
    Ans. You must not consider shifting your home loan if one of the following is applicable in your situation:
    • You have been repaying the loan for a long time now
    • Your current bank has a prepayment penalty
    • You are planning to move out of the property in the near future
  • Does my current credit score affect my chances of successfully completing the transfer? Ans. In case your credit score has dropped significantly since you applied for the initial home loan, it might affect the process. As the balance transfer process works similar to applying for a new home loan, your credit score and history would play a key role in determining your eligibility for the home loan balance transfer.
  • Will, my refinance be affected by the prepayment penalty? Ans. Most banks today won't have a prepayment penalty in the first place. But if your bank has it, then you can ask your new lending bank to take it into account. This will vary from bank to bank.
  • How much time will it take to transfer my home loan from another bank? Ans. Transferring a home loan is treated like buying a home loan all over again by the bank, the loan is transferred to. Therefore, it might take 15-20 days for the home loan to be transferred to the new bank. What is a top-up loan?
  • What is a top-up loan? Ans. For instance, if the property value of your home climbs much higher than its original price at the time you took the home loan and you might require more finance for your home renovation. In this situation, you can add to your loan. This is called a loan top-up.
  • Can I get a top-up on my loan along with the transfer? Ans. Yes, depending upon your eligibility, the loan issuer can offer you the option to top up on the home loan to be transferred to the new bank but there may be processing and legal charges applicable.
  • What processing fee is charged on home loan transfers? Ans. Processing fees on transfer of home loans range from 0.5% to 1% of the loan amount.
  • Is there any interest saving in EMI by home loan transfer to another bank? Ans. The precise reduction in EMI varies based upon:
    • Outstanding principal amount
    • Existing rate of interest charged by your bank
    • Rate of interest presently offered by the new bank
    • Your current EMI
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