Balance Transfer of a Home Loan
Balance Transfer refers to transferring of outstanding Home Loan Balance from one financial institution to another, for a lower Interest rate or Top-up Loan or higher Tenure. It’s a smart move, as it lets you transfer your Home Loan outstanding balance to another Bank or financial institution, at a lower rate of interest.
The most apparent benefit of transferring your Home Loan balance is a lower interest rate from the new lender. This can significantly affect the total amount of interest you pay over the loan tenure.
Benefits of Balance Transfer of Home Loan
- Reduces the interest rate
- Lower the EMI
- Get Top-up at Nominal Interest rate for personal use
- No Closer charges applied on floating rate home loan
- You may close your Personal/business loan by the top up amount on home loan
- LTV is 75% to 90 % for top up
Benefits of Lower Interest Rate:
The lower rate of interest is the biggest benefit of opting for a Home Loan Balance Transfer. If another bank or housing finance company offers a lower interest rate than your existing lender, it should definitely be considered. Even a tiny difference of 0.5% p.a. in interest rate makes a difference in the overall amount you pay. Moreover, it helps to bring down the monthly burden of EMIs.
Suppose you have an outstanding Home Loan of Rs 60 Lakhs with ABC Bank. The rate of interest is 9.75% p.a., and the remaining term is 20 years.
Case 1: If you decide to continue with the existing lender, your expenses will be:
| EMI | Rs 56,911 |
| Total Interest Payable | Rs 76,58,643 |
| Total Dues (Principal + Interest) | Rs 1,36,58,643 |
Case 2: If you opt for a Home Loan Balance Transfer with XYZ Bank, which is offering a 1.00% lower interest rate than your existing lender, i.e. 8.75%, your expenses will be:
| EMI | Rs 53,024 |
| Total Interest Payable | Rs 67,25,434 |
| Total Dues (Principal + Interest) | Rs 1,27,25,434 |
Thus, reducing the rate of interest by just 1.00% can save Rs 9,33,209.
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Below are the Interest rate of leading financial institutions
| Banks/NBFC’s | Interest Rate (p.a.)
Balance Transfer Amount |
Top-up Amount (For Personal Use) Rate (P.a.) |
| HDFC Bank | 8.60 % Onwards | 0.20% to 0.30% above home loan Rate |
| ICICI Bank | 8.75% Onward | 0.20% to 0.30% above home loan Rate |
| LIC HFL | 8.50% Onwards | 0.50% above home loan Rate |
| PNB Housing Finance | 8.80% Onwards | 0.20% to 0.30% above home loan Rate |
| IDFC Bank | Up to 8.80% | 0.20% to 0.30% above home loan Rate |
| Union Bank of India | 8.40% Onwards | 0.20% to 0.30% above home loan Rate |
| IDBI Bank | 8.70% Onwards | 0.30% to 0.50% above home loan Rate |
| Bank of Maharastra | 8.50% onward | 0.50% above home loan Rate |
Transfer Your Home Loan Now Click Here To get balance transfer Quotes