Home Loan Balance Transfer: When It Saves Money

A home loan balance transfer means moving your remaining loan to another lender that offers a lower interest rate or better terms. Done at the right time, it can save a lot of interest.

When it is worth it

• The new rate is clearly lower than yours.
• A good number of years are still left – most interest is paid in the early years.
• Your CIBIL score and repayment record are good.

Costs to compare

• Processing fee of the new lender.
• Legal and valuation charges.
• Stamp duty on the new loan papers in some states.

For floating-rate home loans taken by individuals, RBI rules do not allow prepayment or foreclosure charges, so closing the old loan is usually free. Check this for fixed-rate loans.

Try your own lender first

Ask your current lender to lower your rate. Many lenders offer a rate reset for a small fee, which avoids paperwork.

The process

1. Get a list of documents and the outstanding amount from your current lender.
2. Apply with the new lender; they value the property and check your profile.
3. On approval, the new lender pays the old lender directly.
4. The old lender returns your property papers to the new lender.

Do the maths

Compare the total interest left on your current loan with the new one plus all fees. The EMI calculator helps you see the difference.