Home Loan Balance Transfer facilitys allows existing home loan borrowers to transfer the outstanding loan amount of their existing home loan to a new lender at lower interest rate and/or for longer tenures. The lower interest rate availed through home loan balance transfer facility helps such borrowers to reduce their overall interest cost. This facility is especially beneficial for those who took housing loans at higher interest rates and now are eligible for much lower rates due to improved credit profile.
The balance transfer rates offered to existing home loan borrowers would largely depend on the lenders’ assessment of the various aspects of their applicants’ credit profile, such as their credit scores, age, repayment capacity, occupation, employer profile, etc. Home loan balance transfer interest rates are usually the same as the regular home loan rates. However, there are a few lenders that offer different rates for home loan balance transfer cases. The following table will give you a fair idea of balance transfer rates charged by some of the top banks and HFCs in India:
Name of Lender | Interest Rates (% p.a.) | ||
Up to Rs. 30 Lakh | Above Rs. 30 Lakh to Rs. 75 Lakh | Above Rs. 75 Lakh | |
State Bank of India | 8.40% onwards | 8.40% onwards | 8.40% onwards |
HDFC Bank Limited | 8.50% onwards | 8.50% onwards | 8.50% onwards |
LIC Housing Finance | 8.35% – 10.35% | 8.35% – 10.55% | 8.35% – 10.75% |
ICICI Bank | 8.75% onwards | 8.75% onwards | 8.75% onwards |
Kotak Mahindra Bank | 8.70% onwards | 8.70% onwards | 8.70% onwards |
PNB Housing Finance | 8.50% – 14.50% | 8.50% – 14.50% | 8.50% – 11.45% |
Punjab National Bank | 8.45% – 10.25% | 8.40% – 10.15% | 8.40% – 10.15% |
Bank of Baroda | 8.40% – 10.65% | 8.40% – 10.65% | 8.40% – 10.90% |
Union Bank of India | 8.35% – 10.75% | 8.35% – 10.90% | 8.35% – 10.90% |
IDFC First Bank | 8.75% onwards | 8.75% onwards | 8.75% onwards |
L&T Finance Limited | 8.60% onwards | 8.60% onwards | 8.60% onwards |
Bajaj Housing Finance | 8.50% onwards | 8.50% onwards | 8.50% onwards |
Tata Capital Housing Finance | 8.75% onwards | 8.75% onwards | 8.75% onwards |
Federal Bank | 8.80% onwards | 8.80% onwards | 8.80% onwards |
Axis Bank | 8.75% – 13.30% | 8.75% – 13.30% | 8.75% – 9.65% |
Godrej Housing Finance | 8.55% onwards | 8.55% onwards | 8.55% onwards |
Individuals can calculate EMI of their home loan balance transfer amount manually using the home loan EMI calculation formula, EMI = [P x R x (1+R)^N]/[(1+R)^N-1]. However, as manual calculations are time-consuming and more prone to errors, individuals can save their efforts and time by using Paisabazaar’s Home Loan EMI Calculator. The calculator is quick, accurate and convenient for anyone to use. It requires just a few loan details from users such as the loan amount, interest rate and tenure to calculate the EMI along with total interest cost and total amount payable.
Home loan borrowers must refinance their home loans for:
Besides 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 home loan balance transfer are as below:
Also Check: List of documents required for home loan
To apply for home loan balance transfer, existing home loan borrowers should:
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 an 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.
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 | |
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