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FAQs - Home Loan Balance Transfer

Frequently Asked Questions

Q. What is Balance Transfer?

A. It is the total unpaid amount of your existing home loan transferred to another bank, which is offering a lower interest rate. In simple terms, now you just have to pay your EMIs to the bank you've transferred your loan to, at the new (and lower) interest rate.

Q. When should I consider home loan transfer?

A. You should consider home loan transfer when:
  1. The interest rate of your loan is higher than current market rates;
  2. Your loan has a floating rate of interest and you want to reduce risk by opting for a fixed rate of interest; and
  3. You want to lower your EMIs.

Q. When should I not transfer your home loan?

A. You should not transfer the home loan when:
  1. You have repaid the loan for a long time;
  2. Your current bank has a prepayment penalty; and
  3. You plan to move out of the property in the near future.

Q. Will my refinance be affected by a prepayment penalty?

A. Most banks these days do not impose a prepayment penalty. If your bank asks for it, then you can request your new lending bank to take it into account. However, prepayment penalty depends entirely on case to case basis

Q. Can I borrow more than the pending amount of my loan?

A. No, you cannot borrow more than the pending amount of your loan.

Q. Should I transfer my home loan if the current rate of interest does not dip significantly?

A. The chances of the market rate of interest dipping lower are higher if you stay with your current loan for more time. This saves you more money.

Q. Will the bank I transfer my home loan to consider my eligibility evaluation done by the previous bank?

A. No. Any bank you transfer your current home loan to will judge your eligibility for a loan starting from the beginning, that is, from you filing an application for the loan.

Q. When I transfer my home loan, will income tax deduction certificates be issued by the bank in the name of all co-applicants of the primary loan?

A. As per Income Tax rules, only one certificate is issued for a Home Loan hence one certificate will be issued which will have the names of all the applicants.

Q. How much time will a bank take to transfer my loan?

A. It might take 15-20 days for the loan to get transferred because the home loan transfer process is repeated all over again by the new bank the loan is transferred to.

Q. If my credit rating has dropped since I got the primary loan, will it affect my loan transfer?

A. Yes, a lower credit rating will impact your chances of loan transfer negatively as the new bank you transfer the loan to starts the loan approval process from the beginning.

Q. Is it possible to balance transfer my current loan to a different bank?

A. Yes,it is possible to do a balance transfer of your loan from the current bank/NBFC to some other one if you have paid 12 EMI’s in the past on the loan without any delinquencies.