Have you ever thought about switching lenders for your house loan, particularly if you find a better deal elsewhere with a cheaper interest rate?
Having a home loan can be quite beneficial when designing or purchasing a house. Sometimes, you may not be satisfied with the terms of the loan that your present bank is offering. When you first made your home loan decision, you probably looked into and contrasted a number of options to determine which one would best suit your requirements.
Even though the loan you selected might have looked perfect at the time, it’s likely that another lender today has better conditions. If you’re not happy, you might think about moving your home loan to another bank, which could facilitate repayment.
Home Loan Balance Transfer: What Is It?
A balance transfer allows customers to move their current loan to a different bank or financial organization. Three main factors usually initiate a loan transfer: getting a lower interest rate, getting a loan amount increase, or getting a longer loan repayment period. Not many house loan borrowers, meanwhile, are aware of this option’s potential advantages.
Over the course of the loan’s 20–30-year lifespan, a sizeable amount of your income will be used to pay off it. Mostly for interest payments, which make up the majority of the EMI installments.
Think about reviewing your current home loan to see whether you are paying a higher interest rate. It could be time to think about transferring the amount of your house loan if you discover that you have been paying more. You might be able to get a higher return on your investment if you do this.
Why is a Home Loan Balance Transfer a Good Option?
Transferring your home loan from a particular lender to another in order to take advantage of a better interest rate and other advantages is known as a balance transfer. Higher interest rates are a common problem for customers as a result of inflation and growing expenses.
Your personal finances may be directly impacted by high interest rates, especially if you carry debt. Let’s learn in this post why a home loan balance transfer is important and what to think about before you decide to do it.
We definitely wish to attempt to make sure we obtain the greatest deal possible when opting for a home loan to save money. If your financial institution has set a high interest rate on a home loan you have taken out, you may fix the matter by selecting the balance transfer option.
You can move the loan balance from one financial institution to another by using a home loan balance transfer. You can save money on interest through it. This is an alternative to think about if you are having trouble with high interest rates.
Benefits of Transferring Home Loan Balances
For those who cannot provide proof of income, with the help of additional paperwork and with little to no income verification, home loan balance transfers are possible.
No Additional Fees: A straightforward process that is free of any additional fees.
Accessible in India’s Rural Areas: An extensive branch network that is accessible in many locations in rural, semi-urban, and urban areas.
Broad range of Authorized Financial Institutions: You have the option to transfer your home loans from other banks or financial organizations to be eligible for a top-up loan.
The following five criteria need to be taken into account before transferring a balance:
Ask for a Lower Interest Rate: Before transferring the remainder of your home loan, ask your current lender for a lower interest rate. Your bank might take your request into consideration if you have a long-standing relationship with them, taking into account your credit history and ability to repay loans.
Verify Your Credit Score: You can determine if you qualify for a balance transfer or not based on your credit score. If you haven’t always paid back credit on time, it will negatively affect your credit score. Because the new bank will consider your credit score in addition to other variables, having a low credit score will make you less eligible for a loan transfer option.
Charges: Fees associated with the balance transfer process include application, processing, administration, and inspection fees. There will probably be some fees that both your new and current lenders will demand. Determine whether a balance transfer would be less expensive than the interest you would pay.
Check out Terms and Conditions Before Transferring: To avoid any surprise charges, thoroughly review the terms and conditions after selecting a lender for a balance transfer. Make sure you are aware of the loan advantages offered by the new bank.
Expert Advice: Experts advise that if you intend to sell your house in the future or are approaching the end of your loan term, you should avoid taking out a balance transfer loan.
Home Loan Highlights 2024
| Bank/NBFC | R.O.I (Reducing Per Annum) | Processing Fees | Loan Amount | CIBIL Score |
| HDFC Bank Home Loans | 8.45% – 10% | 0.5% – 1% | 5.00 Lacs – No Limit | 650 |
| Kotak Bank Home Loan | 8.75% – 10% | N/A | 20.00 Lacs – No Limit | 700 |
| Bank of India Home Loan | 8.5% – 10.75% | 0.25% – Rs.10000 | 10.00 Lacs – No Limit | 675 |
| Canara Bank Home Loan | 9.25% – 13.8% | N/A | 10.00 Lacs – No Limit | 675 |
| Aavas Housing Home Loan | 9.9% – 18% | 1% – 1.5% | 25.00 Lacs – 5.00 cr | 650 |
| Bajaj Housing Finance Home Loan | 8.45% – 10% | 0.2% – 0.5% | 5.00 Lacs – 75.00 cr | 650 |
| PNB Housing Home Loan | 8.75% – 14% | 0.25% – Rs.10000 | 5.00 Lacs – 20.00 cr | 625 |
| Shri Ram Housing Finance Home Loan | 11.5% – 13% | 1% – 1.25% | 10.00 Lacs – 1.00 cr | 650 |
| We Rize Home Loan | 10% – 18% | 0.5% – 1% | 5.00 Lacs – 75.00 Lacs | 650 |
| Mahindra Finance Home Loan | 9% – 15% | 1% – 3% | 3.00 Lacs – 75.00 Lacs | 650 |
| Capri Global Bank Home Loan | 9.5% – 15% | 1.25% – 1.5% | 10.00 Lacs – 1.50 cr | 650 |
| Tata Capital Home Loan | 8.6% – 11% | 0.2% – 0.5% | 30.00 Lacs – 7.00 cr | 750 |
| Aditya Birla Home Loan | 8.9% – 11% | 0.5% – 1% | 25.00 Lacs – 25.00 cr | 675 |
| Piramal Finance Home Loan | 10.5% – 14% | 1% – 1.5% | 30.00 Lacs – 5.00 cr | 650 |
| Satin Housing Home Loan | 11% – 18% | 2.5% – 3% | 5.00 Lacs – 1.00 cr | 700 |
| Indiabulls Finance Home Loan | 9.4% – 10% | 0.5% – 1% | 20.00 Lacs – 5.00 cr | 675 |
| Federal Bank Home Loan | 8.5% – 10% | 0.5% – Rs.13000 | 50.00 Lacs – 20.00 cr | 675 |
| IDFC Bank Home Loan | 8.85% – 9.25% | 1% – 1.5% | 10.00 Lacs – 5.00 cr | 680 |
| ICICI Bank Home Loan | 8.6% – 10% | 0.25% – 0.5% | 50.00 Lacs – No Limit | 700 |
| Axis Bank (Asha Home Loan) | 9.9% – 14% | 0.5% – 1% | 5.00 Lacs – 1.00 cr | 700 |
| Yes Bank Home Loan | 9.4% – 10.5% | 0.25% – 1% | 50.00 Lacs – 10.00 cr | 700 |
| Yes Bank Home Loan (Small Segment) | 9.9% – 11% | 1% – 1.25% | 5.00 Lacs – 1.00 cr | 680 |
| Standard Chartered Home Loan | 8.5% – 10% | 0.5% – 1% | 25.00 Lacs – 25.00 cr | 700 |
| Jana Small Finance Bank | 10.5% – 13.5% | 1% – 1.5% | 5.00 Lacs – 3.00 cr | 650 |
| DCB Bank Home Loan | 9.75% – 14% | 0.5% – 1% | 30.00 Lacs – 3.00 cr | 650 |
| SBI Bank Home Loan | 8.5% – 10.4% | N/A | 10.00 Lacs – No Limit | 650 |
| Bank of Maharashtra Home Loan | 8.5% – 9.65% | N/A | 10.00 Lacs – No Limit | 675 |
| Indian Bank Home loans | 8.5% – 10.4% | N/A | 10.00 Lacs – No Limit | 675 |
| Union Bank of India Home Loan | 8.5% – 10.8% | N/A | 10.00 Lacs – No Limit | 675 |
| Central Bank of India Home Loan | 8.5% – 10.4% | N/A | 10.00 Lacs – No Limit | 700 |
| Bajaj Finserv Home Loan | 8.5% – 10% | 0.2% – 0.5% | 20.00 Lacs – 15.00 cr | 700 |
| L & T Finance Services Bank Home Loan | 8.5% – 9.5% | 0.25% – Rs.10000 | 30.00 Lacs – 3.00 cr | 650 |
| Vistaar Finance Home Loan | 13% – 21% | 2% – 2.5% | 5.00 Lacs – 50.00 Lacs | 650 |
| IIFL Bank Home Loan | 8.9% – 14% | 1% – 1.25% | 5.00 Lacs – 50.00 Lacs | 650 |
| Aadhar Housing Finance Home Loan | 10.5% – 14.75% | 1% – 1.5% | 5.00 Lacs – 70.00 Lacs | 600 |
| Axis Finance Home Loan | 9.5% – 11% | 0.5% – 1% | 30.00 Lacs – 10.00 cr | 650 |
| Fullerton (Grahshakti Home loan upto 75 lac) | 10.5% – 16.5% | 1% – 1.5% | 10.00 Lacs – 75.00 Lacs | 650 |
| Hero Housing Home Loan | 10% – 11% | 0.5% – 1% | 20.00 Lacs – 5.00 cr | 650 |
| India Shelter Home Loan | 13% – 20% | 1% – 2% | 5.00 Lacs – 50.00 Lacs | 500 |
| Shubham Housing Finance Home Loan | 10.5% – 14.75% | 1.5% – 2% | 5.00 Lacs – 50.00 Lacs | 450 |
| DMI Housing Home Loan | 11.5% – 14% | 1% – 1.5% | 5.00 Lacs – 75.00 Lacs | 650 |
| Vastu Housing Finance Home Loan | 10% – 15% | 1% – 2% | 5.00 Lacs – 3.00 cr | 650 |
| ICICI Home Finance Home Loan | 9.5% – 11 |
Here’s How to Transfer a Home Loan Balance
After learning what a house loan balance transfer is, let’s talk about how it’s handled out. To that end, here are ways to transfer a home loan balance.
- Find out the Financial Gains
It might be advantageous to switch to a new lender if they give you a significantly lower interest rate. Additionally, pay close attention to the EMI cost and tenure. The interest rate continues to increase the principal amount if the term is longer and the EMI amount is lower. Estimate the outflow for each bank and choose the more dependable one.
It is advisable not to switch banks if you have less than five years left in your existing account. Because processing fees and other costs would eliminate any financial gains you may have. Early house loan switching might be financially advantageous if the duration and interest rate are suitable.
- Before Switching, Talk to the Current Lender
Talk about your reasons for switching to your current lender. They may give you a break on the interest rate and EMI period if they are concerned about losing you as a customer. You might save a lot of time and effort by doing this.
You can proceed with the move if your current bank makes no such offers. If you decide to switch house loans, there could be a penalty of up to 5% of the principal amount. Certain banks do indeed waive the full sum.
- Choose a Different Lender
Understanding what offers are out there for home loan balance transfers is helpful, even if your current lender is making an effort to keep you as a customer. Create a list of the top choices for transferring the balance of your home loan. Then filter it based on user reviews, features and perks, and the most advantageous interest rates.
- Documentation and Application
Ask the new lending institution you have chosen for a list of the documents they will want. Along with other paperwork, the majority of lenders will want to see your most recent home loan statement. Complete the application and send in the necessary documentation.
- Await Approval
If everything checks out, the new lending institution will review all the paperwork and approve the loan. Never forget to inquire about how long it takes your lender to process your application and to send the money. The rules and regulations of different banks and financial institutions may differ slightly.
How Much Does it Cost to Transfer the Balance of a Home Loan?
Now that you are aware that the best way to determine whether a house loan balance transfer is a good decision. For you to conduct a cost-benefit analysis, it is imperative that you comprehend the associated expenses.
One kind of expense that you may have to deal with is an extension from the lender for your current house loan. This is the prepayment penalty that is assessed if the loan is closed before its initial term. The other type of expense you may incur comes in the shape of the processing cost assessed by the new lender. Before agreeing to a balance transfer, be careful to review these two costs.
You also need to take additional intangible costs into account in addition to your monetary expenses. Take the time, effort, and energy you put into obtaining the paperwork and carrying out the balance transfer procedure, for example. Don’t neglect the efforts required to figure out the finest offers for a home loan balance transfer.
Is It a Good Idea to Transfer Your Home Loan?
Your loan circumstances and financial situation are the only factors that determine whether or not the change is advantageous. Several banks have decreased interest rates by 10 percent on home loans alone after the RBI reduced the risk weight. However, you need to be fully informed about the terms and conditions as well as the balance transfer.
The interest rates on house loans provided by different banks can be compared using an online home loan balance transfer calculator. Prior to starting a shift, make sure you review every topic this article mentions.