Home Loan Balance Transfer

Home Loan Balance Transfer is a process where an existing home loan borrower can transfer the outstanding loan amount of their existing house loan to a new bank or lender at a lower interest rate. The lower interest rate available through the home loan balance transfer option helps the customer to lower their overall interest rate. This facility benefits customers who took out home loans at higher interest rates and are now eligible for significantly reduced rates due to an improved credit profile.

Home Loan Balance Transfer Interest Rate

Bank Name

Home Loan Balance Transfer Interest Rate

Tamilnad Mercantile Bank

9.10% p.a.

Karur Vysya Bank

9.48% p.a.

Bank of Baroda

8.50% p.a.

Federal Bank

10.15% p.a.

LIC Housing Finance Limited

8.45% - 8.50% p.a.

Union Bank of India

8.75% p.a. onwards

IDFC First Bank

8.85% p.a.

HDFC Ltd

8.50% - 9.00%

Benefits of Home Loan Balance Transfer

An individual can enjoy the benefits of these options by opting for the Home Loan Balance Transfer option:

  • Substantial top-up amount: When a customer transfers the balance on their existing loan, they have the option of receiving a substantial Top-up Loan, which can be utilised for any additional financial needs.
  • Part-Prepayment and Foreclosure Assistance: Individuals with a floating interest rate on their existing home loan are not subject to prepayment or foreclosure fees if they choose to pay off their loan before the end of their term.

Who is Eligible for a Home Loan Transfer?

One can apply for home loan transfer if they meet the following criteria:

  • One must be an Indian Citizen or Non-resident Indian.
  • Minimum age: 23 years, Maximum age: 65 years
  • They should be salaried or self-employed and have a consistent income source.
  • The property must be either ready to move into or already inhabited.
  • One must have completed at least 12 monthly payments or EMIs with the existing lender.
  • There should be no outstanding payments on your existing loan.

Documents Required for a Home Loan Transfer

Here is the list of documents that are required for a home loan transfer:

  • Income Proof: Salary slips and Form 16 (for salaried), the last three years' ITR (for salaried, self-employed, and professionals), and the previous six months' bank statements are all acceptable proof of income.
  • Identity Proof: PAN card/Aadhaar card/Voter ID/ Passport
  • Proof of residence: Aadhaar Card, Electricity Bill or Water Bill. 
  • Additional documents include the most recent principal outstanding letter, a list of documents from the current financier, and a repayment track record.

How to Transfer Home Loan from One Bank to Another?

The process for home loan transfer from one bank to another is mentioned below:

Step 1: Navigate to the official website of the respective bank.

Step 2: Log in to your Home Loan account with the existing application number.

Step 3: Read the terms and conditions, including the interest rate and processing fee required for Balance Transfer.

Step 4: Apply for a ‘Home Loan Balance Transfer’. Fill in the appropriate fields, such as name, property type, loan tenure, and the bank's name, where you want to transfer the home loan balance.

Step 5: After finishing, you will be able to view your loan offer.

Step 6: Pay all applicable costs and submit the required documents. The applicant can also get a consenting letter from the current bank along with the outstanding loan amount.

Step 7: All the documents submitted by the user will be forwarded to the new lender or ban for approval.

Step 8: The applicant will be notified after successful approval and transfer.

Home Loan Transfer Charges

Aside from the interest rate, several other charges are associated with transferring a home loan to a new lender. Two essential charges that home loan customers should consider before applying for a home loan balance transfer are as follows:

  • Foreclosure Fees: These fees are paid to the present lender to close the loan before the loan tenure. These fees do not apply to floating-rate home loans. However, with fixed-rate house loans, these fees can reach 4% of the outstanding amount. 
  • Processing Fees: These fees must be paid to the new lender to process the new home loan application during the transfer and can amount to up to 6% of the loan amount.
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