Home loan: how to get the most out of home loan balance transfer to save on IMEs

Home loan balance transfer: While Reserve Bank of India (RBI) lending rates are at an all-time low, various public and private sector banks have offered home loans as low as 6.7%. Many of these banks offer these low interest rates not only on new loans, but also on balance transfers.

So if you have a home loan and want to reduce EMI payments, you may want to consider the balance transfer option.

What is home loan balance transfer?

Simply put, the Balance Transfer Facility allows you to transfer your existing home loan from one lender to another lender.

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Why should you consider transferring the balance of a mortgage?

The interest rates for home loans vary from one lender to another. And, with the changes in the repo and reverse repo rates of the RBI, the interest rates on home loans keep changing.

Undoubtedly, you must have approached various banks / lenders before preselecting the current lender for your home loans. However, it should be noted that with the change in market conditions, other lenders have had to start offering home loans at a very competitive interest rate.

When you transfer the loan from the existing lender to a new lender who offers a low interest rate, you will pay a lower amount as an IME.

Should a low interest rate be the only criterion for opting for a balance transfer?

Undoubtedly, low interest rate is the main reason borrowers to opt for balance transfer, a diligent borrower should assess the other costs involved like the penalties he has to pay when foreclosing his account. existing loan, processing fees payable to new lenders, etc.

According to experts, balance transfer is not profitable when you are nearing the end of your mortgage because the transfer fee compensates for low payments from IMEs.

What are the other benefits of a balance transfer?

In addition to the reduced IMEs, one can check other facilities such as partial payment, additional loans, foreclosure without penalty, etc. while choosing the new lender.


Before opting for the balance transfer, one can negotiate with the existing lender the terms of the loan. If you find a lender who offers the option of transfer at a reduced interest rate, you should assess the cost of the transfer and make the decision accordingly.