Everything You Need to Know about Home Loan Balance Transfer

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Everything You Need to Know about Home Loan Balance Transfer

  • Highlights

  • Refinancing helps you avail lower interest rates

  • Consider stability & savings when transferring home loan

  • Seek pre-approved offers & better services

  • Transfer your home loan early in the tenor

Individuals burdened by home loan burden seek opportunities to ease their load. When finding another lender offering lower interests on home loan, you may contemplate a balance transfer.
Transferring your home loan to a new lender is completely feasible and practical.

Home loan balance transfer

Home loan balance transfer is also known as refinancing. Almost every lender offers a home loan balance transfer facility. As a borrower, if you have the required eligibility, you can switch your home loan and get a better deal.
Lenders however, try their best to retain good customers by offering the best terms and rates. One way of looking at it is, if you are getting a better deal, you can ask your existing lender to relook at your interest rate based

on your repayment track record and credit score. Your existing lender might renegotiate the terms with you.

Why opt for a balance transfer?

Apart from lower interest rates, most borrowers contemplate a balance transfer, for the following reasons:
1) Revised payment terms
2) Pre-approved offers
3) Better services

When balance transfer makes most sense?

It is not advisable to transfer your home loan to a new lender every time there’s a rate cut. Here’s a lowdown on some situations, where a home loan balance transfer is advisable:
1. When the remaining home loan tenor is longer
When your home loan is in the initial years, a balance transfer is profitable. If you are approaching the end of your home loan, it doesn’t make sense to incur the cost of transferring the home loan.
2. When the unpaid home loan amount is bigger
If major portion of the home loan is remaining to be unpaid and you get a lower interest rate with a new lender, it makes sense to transfer the home loan. On the other hand, if the amount of unpaid home loan is just 5 to 10% of the total home loan amount, it won’t be a wise decision to transfer your home loan.
3. Overall reduced cost
Most borrowers just look at the lower interest rate while transferring the home loan. You must know there will be a cost involved for transferring your home loan to a new lender. Consider the overall cost of transferring the home loan and then look the benefits involved. If the benefits are higher than the costs, you may proceed with the home loan transfer facility.

Tax Benefits on a Home Loan

Cost-benefit analysis: An important factor for a home loan balance transfer

You must have heard several times, weigh your options before you transfer your home loan. Here’s an explanation about what exactly you should weigh in terms of costs and benefits while transferring your home loan.

Additional Read : How credit score can determine your home loan EMIs

The Costs

1. Consider each and every cost involved: The cost can be from the existing lender as a penalty for closing the home loan before time. The other cost can also be as a processing fee from the new lender.
2. Consider the hassles: There won’t be just monetary costs involved. Few things can’t be measured but they come as an additional liability. Consider, the hassles in processing your home loan transfer like the documentation or running around.

The Benefits

1. Consider the savings: This would be a direct impact of transferring your home loan. The reduced cost in terms of your monthly EMIs would be your savings.
2. Consider the non-monetary benefits: There will be certain benefits that won’t be reflected immediately in your savings, but then they will help you have a better experience in terms of your home loan.

Weigh the total costs against the benefits and then make a decision.


A home loan balance transfer is a win-win situation for a borrower. But, make sure you make an informed choice and don’t fall into the trap of short-term offers advertised by lenders.

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An easy guide to increase your existing homeloan