– A Promise of Security and Peace –
The Home Loan Balance Transfer facility allows current home loan borrowers to move their outstanding loan balance to a new lender offering a lower interest rate and/or longer tenure. By securing a lower interest rate through this facility, borrowers can significantly reduce their overall interest costs. This option is particularly advantageous for those who initially obtained home loans at higher interest rates and now qualify for much lower rates due to an improved credit profile. Apply now today to find the best coverage to get started.
| Car Loan Details | |
|---|---|
|
Interest Rate (Monthly reducing balance) |
Starts from 8.70% p.a. |
|
Guarantor Requirement |
Varies with bank |
|
Pre-closure Charges |
Varies with bank |
|
Loan Tenure |
1 year to 8 years |
|
Processing Fee |
Depends on the bank |
– On This Page –
The balance transfer rates available to existing home loan borrowers primarily depend on the new lender’s evaluation of various aspects of the applicant’s credit profile, such as credit score, age, repayment capacity, occupation, and employer profile. Typically, home loan balance transfer interest rates are similar to regular home loan rates. However, some lenders offer different rates specifically for balance transfer cases. The following table provides an overview of balance transfer rates charged by some of the leading banks and Housing Finance Companies (HFCs) in India:
| Name of Lender | Up to Rs. 30 Lakh | Above Rs. 30 Lakh to Rs. 75 Lakh | Above Rs. 75 Lakh |
|---|---|---|---|
| State Bank of India | 8.50% onwards | 8.50% onwards | 8.50% onwards |
| HDFC Bank Limited | 8.70% onwards | 8.70% onwards | 8.70% onwards |
| LIC Housing Finance | 8.50% - 10.35% | 8.50% - 10.55% | 8.50% - 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 | 8.85% onwards | 8.85% onwards | 8.85% onwards |
| L&T Finance Limited | 8.65% onwards | 8.65% onwards | 8.65% 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 |
Note: Interest rates as of 24 June 2024.
Individuals can manually calculate the EMI for their home loan balance transfer using the following formula:
EMI=P×R×(1+R)N(1+R)N−1\text{EMI} = \frac{P \times R \times (1+R)^N}{(1+R)^N – 1}
Where:
However, manual calculations can be time-consuming and error-prone. To save time and ensure accuracy, individuals can use Paisabazaar’s Home Loan EMI Calculator. This tool is quick, precise, and user-friendly. It only requires basic loan details such as the loan amount, interest rate, and tenure to calculate the EMI, along with the total interest cost and total amount payable.
Lower Interest Rate: Many existing home loan borrowers may have secured their loans at higher interest rates due to lower loan eligibility and a weaker credit profile. However, improvements in their credit profiles over time can make them eligible for home loans at significantly lower interest rates.
Maximum Tenure: Several lenders allow borrowers to choose loan tenures that are longer than the remaining tenure of their original home loan. Opting for an extended loan tenure can lead to lower EMIs, thus reducing the monthly financial burden. However, this option may result in higher overall interest costs.
Top-up Loan: Borrowers who opt for a balance transfer often have the option to take out a top-up loan alongside the transfer. This top-up amount can be used for personal or professional needs without any restrictions on usage. The amount available for the top-up may vary by lender, depending on the overall loan eligibility of the balance transfer applicant. This option is beneficial for borrowers who are unable to secure top-up loans from their current lenders or are facing higher interest rates for such loans.
Additional Benefits: Depending on the new lender, borrowers may enjoy enhanced loan features, such as EMI waivers, zero processing fees, and more.
In addition to interest rates, several other costs are associated with transferring a home loan. Two significant charges that borrowers should consider before opting for a home loan balance transfer include:
Foreclosure Charges: These are fees paid to the existing lender for closing the loan before the completion of the loan tenure. Foreclosure charges are typically waived for floating rate home loans, but for fixed rate home loans, they can be as high as 4% of the outstanding principal.
Processing Fees: This fee is charged by the new lender for processing your home loan application during the transfer. Processing fees can range up to 6% of the loan amount.
KYC Documents:
Proof of Income:
Additional Documents:
To apply for a home loan balance transfer, existing home loan borrowers should:
Approach Current Lenders: Start by contacting banks or Housing Finance Companies (HFCs) with which you have a banking relationship. Many lenders offer lower interest rates to existing customers with a good credit profile.
Check for Pre-approved Offers: Look for any pre-approved offers for home loan balance transfer. These loans usually have a shorter processing time as applicants often meet the eligibility criteria.
Explore Online Options: Visit online financial marketplaces to compare home loan balance transfer rates from various banks and HFCs.
Negotiate with Current Lender: Contact your existing lender to see if they can match the best home loan balance transfer rates. If they refuse, consider transferring your home loan to the lender offering the lowest interest rates.
The Equated Monthly Installments (EMIs) that you will pay will depend on a few key factors.
The higher the loan amount, the higher your EMI will be. Similarly, the shorter the loan tenure the higher the EMI.
To calculate the EMI on your car loan, you can use the formula:
EMI=P×R×(1+R)N(1+R)N−1\text{EMI} = \frac{P \times R \times (1+R)^N}{(1+R)^N – 1}
where:
Manual calculations can be error-prone, complex, and time-consuming, so using an online personal loan EMI calculator is preferable. This calculator requires only a few basic details such as the interest rate, loan amount, and loan tenure.
Once these details are entered, the EMI amount is calculated instantly. Additionally, the calculator provides the total interest amount and an amortization schedule for easy reference.
Step 1: Compare Offers
Research balance transfer offers from various lenders, comparing interest rates, features, benefits, processing fees, and other charges.
Step 2: Cost-Benefit Analysis
Evaluate the costs and benefits of the balance transfer, ensuring that the advantages outweigh the associated costs.
Step 3: Negotiate with Current Lender
If you find a better deal, negotiate with your existing lender to see if they can provide the same or better terms.
Step 4: Obtain Required Documents
Once you decide to proceed with the transfer, request an NOC (No Objection Certificate), foreclosure letter, loan repayment record, and property documents from your current lender.
Step 5: Apply with New Lender
Initiate the home loan application process with the new lender by submitting the application form and all necessary documents.
Step 6: Receive Sanction Letter
Obtain a sanction letter and sign the loan agreement with the new lender.
Step 7: Pay Off Previous Loan
The new lender will pay off your outstanding home loan amount by transferring the funds to your previous lender via cheque or demand draft.
Step 8: Close Previous Loan Account
After the previous lender receives the outstanding loan amount, they will cancel all cheques and ECS and close your home loan account.
The following table demonstrates how transferring your home loan can lead to savings 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 |
| Difference in EMI Payable | Rs. 3,241 | Rs. 3,241 |
| Total Interest Payable | Rs. 17,59,210 | Rs. 11,75,704 |
The primary reason for transferring a home loan is to take advantage of a lower interest rate offered by the new lender.
You can refinance up to the outstanding amount of your home loan. If you need more than this, you can apply for a top-up loan during the balance transfer process. The maximum top-up amount depends on your repayment capacity and the market value of your property.
Yes, the maximum amount you can transfer is equal to your outstanding home loan.
You can transfer your home loan multiple times, but doing so frequently can be cumbersome, as the process is similar to applying for a new home loan.
Typically, there is no lock-in period for floating rate home loans. However, it’s advisable to check with your lender or refer to your loan agreement for any specific clauses.
Processing fees for home loan transfers usually range from 0.5% to 1% of the loan amount.
You can use a home loan EMI calculator to determine your total interest cost. Simply input the loan amount, tenure, and interest rate to get your EMI and total interest payable.
Yes, if your credit score has significantly dropped since your original loan application, it may affect your eligibility for the balance transfer, as the process is similar to applying for a new loan.
Most banks and HFCs do not impose prepayment penalties. If yours does, you can discuss this with your new lender, as policies vary by institution.
Transferring a home loan is treated like applying for a new loan, so the process may take around 15-20 days.
A top-up loan allows you to borrow additional funds on your existing loan, especially if the value of your property has increased since you took out the original loan.
Yes, depending on your eligibility, the lender may offer a top-up loan during the balance transfer, though there may be processing and legal charges involved.
HDFC’s home loan balance transfer interest rate starts from 8.55% per annum, but the final rate depends on various factors such as your repayment capacity, loan amount, credit score, and property value.
You should reconsider transferring your home loan if the total savings on interest after accounting for various transfer charges are minimal. Savings potential is typically lower if the transfer occurs in the later stages of the loan tenure.
