Purchasing their dream home is one of the most significant financial commitments in a person’s life. However, due to the urge to get emergency funds, people at times tend to apply for a home loan from a lender charging high rates of interest and unfavourable loan terms. In such a circumstance, a home loan balance transfer facility can come in handy.
Almost every leading financial institution in our country offers this facility, wherein borrowers can transfer their outstanding home loan amount to a different lender. People usually opt for this facility to get more lucrative benefits, such as low interest rates, high repayment tenor, etc. and to increase the affordability of their ongoing loan. However, before opting for a balance transfer, one should know the home loan transfer charges to assess whether their option is viable for their situation or not.
Home loan balance transfer fees and associated charges
The following table illustrates the effective rate of interest for different types of home loan options:
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For salaried employees
| Loan type | Rate of interest per annum |
| Home loan | 8.60% to 15.00% |
| Home loan (balance transfer) | 8.70% to 15.00% |
| Top up | 9.80% to 18.00% |
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For self-employed applicants
| Loan type | Rate of interest per annum |
| Home loan | 9.10% to 15.00% |
| Home loan (balance transfer) | 9.50% to 15.00% |
| Top up | 10.00% to 18.00% |
Note: Prospective borrowers must keep in mind that these rates of interest tend to vary from lender to lender. Hence, it is a wise idea to check the interest rates offered by your preferred lending partner by getting in touch with them directly.
Borrowers can also use the home loan interest calculator to determine the exact interest and the monthly instalments that they have to pay for their opted credit.
That said, here is a table illustrating the other charges and fees associated with a home loan balance transfer:
| Fee type | Applicable charges |
| Processing fee | Up to 7% of the total loan amount + applicable GST |
| Loan statement charges | Nil |
| Interest and principal statement charges | Nil |
| EMI bounce charges | Up to Rs.10,000 |
| Penal interest | 24% p.a in addition to the applicable interest rate on the overdue amount |
| Secure fee | One-time fee up to Rs.9,999 |
Foreclosure and prepayment charges
Those who opt for a home loan with a floating interest rate do not need to pay any foreclosure or prepayment charges. However, if a borrower uses the home loan amount for business purposes or opts for a home loan with a fixed interest rate, here are the associated charges for the same:
| Particulars | Term loan | Flexi term loan | Flexi hybrid loan |
| Time period (in months) | Less than 1 | Less than 1 | Less than 1 |
| Part-prepayment fees | 2% on the part payment amount | Nil | Nil |
| Full prepayment fees | 4% on the outstanding principal amount | 4% of the available credit limit | 4% on the sanctioned loan amount |
What are the primary benefits of applying for a home loan balance transfer?
Some of the most lucrative benefits of the home loan balance transfer facility are as follows:
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Lower rates of interest
Borrowers usually switch their lending partners if they find a home loan at a lower interest rate. Lower rates of interest reduce the monthly instalments, thereby reducing the financial burden and making money management easier.
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Top-up on a home loan
Candidates can also get a top-up loan on the existing home loan by opting for the balance transfer option. This top-up loan is an extra credit amount that is given by several lenders on top of the existing home loan at a competitive interest rate. When the balance transfer facility is combined with a top-up home loan, it makes financial management easier.
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Flexible loan terms
A home loan balance transfer allows borrowers to renegotiate the loan terms with a lender. A candidate might want to opt for a longer repayment tenor or want to increase the monthly EMIs. He or she can discuss them with a new lender and opt for the best loan terms.
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Better customer handling and services
Candidates, at times, also opt for Home loan balance transfer option due to inappropriate customer facilities offered by an existing lender. If a new lender offers cutting-edge facilities, such as online credit management, pre-approved offers, digital procedures, etc., he or she is more likely to transfer their outstanding loan amount to the new lender.
How to apply for a home loan balance transfer?
Now that you know the associated home loan transfer charges and the benefits of this financial facility, let us move on to the steps involved in applying for this facility. Follow these steps to make a home loan balance transfer application:
Step 1: Visit the official website of your preferred lending institution.
Step 2: Navigate to the home loan balance transfer page and open the balance transfer application form.
Step 3: On the application form, make sure to provide all your personal and professional details, such as full name, PAN card number, employment type, loan type, PIN code, and more.
Step 4: Following this, submit all the necessary details of the property for which you want to opt for the balance transfer facility.
Once you fill up all these details and submit all the necessary documents, a representative of the financial institution will get in touch with you to guide you through the next steps.
That being said, existing customers also get pre-approved offers on secured credit options, such as home loan and loan against property. Almost every leading lending partner in our country provides these offers. The pre-approved offers expedite the overall loan application process and facilitate a seamless and hassle-free disbursal of the loan amount. In order to check the pre-approved offers, candidates will have to enter their names and phone numbers in the designated section of the lender’s website.
To sum it up, a home loan balance transfer option can be a viable option when you get the best deals that suit your financial strength and repayment capacity. However, it is important to know the home loan transfer charges to avoid unnecessary confusion in the long run.
Also, after transferring your home loan to a new lender, you must ensure to make timely repayments of all the EMIs. Failing to repay or delaying even a single monthly instalment will negatively affect your credit score. The lower the credit score, the lower the chances of getting loan approvals in the long run.
