Home loan balance transfer means transferring your existing home loan to another lender at a lower rate of interest. The reduced rate of interest helps borrowers save on EMI as well as interest outgo on a home loan. Where should you apply for a home loan balance transfer and when should you do it to maximize? Read all these and more on this page.
You can transfer your existing home loan to another bank without any hassle. All banks and NBFCs provide a home loan balance transfer and top-up facility. Have a look at the top lenders where you can apply for a balance transfer:
- State Bank of India (SBI)
- Bank of Baroda
- HDFC Limited
- PNB Housing Finance (PNBHFL)
- LIC Housing Finance (LIC HFL)
- Axis Bank
- ICICI Bank
- Kotak Mahindra Bank
A home loan balance transfer can prove to be very beneficial for a borrower in the current times as the interest rate has come down drastically in the last 6 months or so. The home loan rate has now fallen to 7%-8% on average, giving you lucrative balance transfer opportunities. However, there are a few things that must be kept in mind when it comes to balance transfer. You must check the EMI difference and also the actual saving you can do by switching the loan. Let us have an overview of the benefits:
- Lower interest rates so lower EMIs
- Saving on total interest outgo
- Additional Top-Up facility
When it comes to home loan transfer, Top-up is also a common demand among the borrowers. Since the new rates are lower than the existing one, the extra money you can get through Top-Up will not cost you much. You can use this money for any personal or business needs. Having said that, there are many banks and NBFCs that provide balance transfer on home loan along with the top-up facility of up to 100% of the original loan amount at affordable rates.
A home loan balance transfer yields the most when you do it at the right time. But not many know the right time for it. You will save more when the loan has quite a lot of time left compared to when the loan is just a few years away from being over. So, in a 20-year home loan, the ideal time for balance transfer would be within 10-12 years of the repayment tenure. The sooner you do, the better it will be for you. In case you do it after paying EMIs for 15 years or so, the savings will not be much. The interest rate offered by the new lender on a balance transfer should be at least 0.25%-0.50% lower than the one charged by the existing lender. In case you are doing a balance transfer with not many years left for the loan to be over, the interest rate difference should be much beyond 0.25%-0.50% so that you can save a substantial amount of money.
The process of home loan transfer includes research on which lender is going to be best for you and then submitting the required documents as mentioned below:
- Balance transfer form
- Last 6 months bank statement
- Last 3 months salary slip
- Last 2 years ITR copy
- Form 16
- NOC from your builder/society
- Proof of Ownership