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Buying a house is a dream for many, but home loans can be a long-term financial commitment. Over time, if interest rates drop or better offers are available, transferring your home loan to another bank or financial institution can help save money. A home loan transfer is a process where you shift your existing loan from one lender to another for lower interest rates, better terms, and reduced EMI.
A home loan transfer, also known as a home loan balance transfer, allows borrowers to shift their outstanding loan amount from their current lender to a new lender offering better terms. This is usually done to benefit from lower interest rates, better customer service, or additional features like top-up loans.
There are several reasons why people opt for a home loan transfer:
To be eligible for a home loan balance transfer, you need to meet the following conditions:
Before transferring your home loan, compare interest rates, processing fees, and loan terms from different banks and NBFCs (Non-Banking Financial Companies). Use online EMI calculators to check potential savings.
Visit your existing lender and request a No Objection Certificate (NOC) and loan statement that shows your repayment history.
Submit your home loan transfer application with the new bank. The new lender will assess your eligibility, repayment capacity, and credit score.
The following documents are usually required:
Once the new lender approves your loan transfer, they will pay the outstanding loan amount to your old lender. You will then sign a new loan agreement with the new lender.
After receiving the payment, your old lender will close your loan account. Ensure you receive a loan closure certificate and a no dues certificate.
Begin repaying your new EMIs to the new lender as per the agreed terms.
Although a home loan transfer can save money in the long run, there are some costs involved:
A lower interest rate does not always mean significant savings. Use an EMI calculator to determine the actual difference in total interest paid.
Some banks charge high processing fees and additional charges that can reduce potential savings.
If you are nearing the end of your loan tenure, the benefits of a transfer may be minimal.
A credit score of 750+ increases your chances of getting a home loan transfer at a lower rate.
Missing documents can delay or cancel your transfer application. Keep all necessary paperwork ready.
Many banks and financial institutions offer home loan transfer facilities. Here are some of the top ones:
| Bank/NBFC | Interest Rate (Per Annum) | Processing Fee |
|---|---|---|
| SBI | 8.40% – 9.50% | 0.25% – 0.50% |
| HDFC Bank | 8.45% – 9.60% | 0.5% – 1% |
| ICICI Bank | 8.50% – 9.70% | 0.5% – 1% |
| Axis Bank | 8.55% – 9.80% | 1% |
| LIC HFL | 8.30% – 9.40% | 0.5% |
| Bajaj Finserv | 8.75% – 10% | 1.5% |
Interest rates may vary based on borrower profile and RBI guidelines.
A home loan transfer is beneficial for:
A home loan transfer can be a smart financial move if done at the right time. However, it’s essential to compare offers, calculate potential savings, and check associated costs before making a decision. Ensure you meet the eligibility criteria and maintain a high credit score to get the best interest rates.
By choosing the right lender and understanding the process, you can significantly reduce your financial burden and make your home loan more manageable.
