How to Transfer Your Home Loan Balance and Get a Lower Interest Rate

Quick Guide On Home Loan Balance Transfer

Quick Guide On Home Loan Balance Transfer

Interest rates fluctuate throughout the year. The best way to get the lowest possible interest rate is to balance your loan with other financing options. Balancing your home loan with other sources of financing can lower your interest rate and save you money in the long run. If you have a solid plan for how you will finance your house, a higher interest rate isn’t necessarily something to worry about. In this article we’ll explain how your home Loan balance transfer can lower your interest cost and save you money in the long term by periodically refinancing.

Why Balance a Mortgage?

When you refinance your mortgage, you take out a new loan to pay off the existing one. Then, you use the cash you get from the new loan to pay off the old one. In this way, you may be able to get a lower interest rate and save yourself some cash every month. There are a few reasons that you would decide to balance your home loan. If you are trying to pay off your mortgage quicker because you are planning to move soon, you may want to look into a home equity loan.

This will help you pay off your current mortgage at a faster rate or pay off some of your home’s expenses. Another scenario where you may need to consider a home equity loan is when you are looking to buy another property in the near future. A home equity loan allows you to make larger renovations or improvements to your home and qualify for a lower interest rate.

Also Read: Tips And Tricks To Reduce Interest Paid On Home Loan EMIs.

What You’ll Need to Balance Your Loan

Home appraisal – You’ll need an appraisal to get a mortgage insurance mortgage insurance .This is a type of insurance that protects the lender in case you default on your loan. It’s required in order to get the loan but it’s also expensive. If you can get a loan that doesn’t require it, it will save you some money in the long run. Home inspection – You’ll need a home inspection to get a mortgage. It’s required to get a mortgage but it is also very expensive. If you can get a loan that doesn’t require it, it will save you some money in the long run.

When to Refinance Your Mortgage

You don’t want to refinance your mortgage every single month. In fact, most experts recommend that you refinance your mortgage every few years. This is because rates fluctuate throughout the year and can change. By comparing one month’s rate to another month’s rate you can see if you are currently getting a better or worse rate.

Lenders are usually not allowed to change the terms of your loan until a certain date but they are more than happy to show you the trend of their rates and give you a sneak peak at when they might change. There are several times throughout the year when the interest rate on your current home loan may be below the rate you can get on a refinance. It is best to wait until then to refinance your loan. You can wait until the annual rate changes in January, April, July, and October. Or throughout the year you can wait until rates change significantly every few months.

Can’t Refinance? Then Balance With Another Type of Loan

Alright, so you decided to refinance your home loan every few years instead of every month. This can save you some money in the long run but what if you can’t get a refinance? This is when you should think about getting a home equity loan to pay off some of your expenses or pay off your current mortgage. When you can’t get a refinance, you can get a home equity loan. It’s basically a second mortgage on your house. You let the lender borrow money against the equity in your house. This is a loan like any other and it will impact your credit score but it can be a helpful option if you need some extra cash.

How to Refinance a Home Loan

Home equity loans and lines of credit are difficult to understand because of their names. That’s because they are not actually refinancing but rather taking a second mortgage. This means that you will have to make payments on the loan as if you had a home equity loan. You will also be charged interest on it just like you would any other loan. You’ll have to pay off your home equity loan when it comes due just like you would any other loan. You may have to do some home equity line of credit consolidation or home equity loan refinance balancing to make it work. If you can’t make the payments on your home equity loan, you will have to sell your home. 

Best Home Loan Transfer Rates Aug 2022

Banks Transfer Rates Current RLLR
SBI 6.75% p.a. 6.65%
HDFC Ltd 6.75% p.a. 16.05% (RPLR)
LIC Housing Finance Limited 6.90% p.a. 14.70% (LHPLR)
Axis Bank 6.90% p.a. 4.00% (Repo Rate)
Bank of Baroda 6.75% p.a. 6.75%
Canara Bank 6.90% p.a. 6.90%
Union Bank of India 6.80% p.a. 6.80%
Kotak Mahindra Bank 6.65% p.a.
United Bank of India 6.95% p.a. 6.80%
IDFC First Bank 6.90% p.a.
Federal Bank 7.65% p.a. 9.63%
Karur Vysya Bank 7.35% p.a. 7.35%
Dhanalakshmi Bank 7.85% p.a. 7.00%
Tamilnadu Mercantile Bank 8.25% p.a. 8.25%

 Home Loan Transfer Eligibility Criteria

Age: 23 to 65 years
Type of employment: Salaried or self-employed


Nationality: Resident Indians and NRIs

Ways to Transfer Home Loan from One Bank to Another? 

Step 1 You have to visit the concerned bank’s website.
Step 2 Ensure that you  checked all the terms and conditions along with the interest rate and processing fee.
Step 3 Apply for home loan balance transfer, after you are  satisfied with the scheme
Step 4 Fill in the required fields, including your name, property type, tenure of the existing loan, and the bank’s name, among others.
Step 5 Upon completion, you will be able to view your loan offer.
Step 6 Pay all the necessary fees and upload your documents.
Step 7 Complete your application and wait for the approval.

Also Read: The Ultimate Home Loan Calculator; Check How Much Can You Afford?

Summing up

There are a lot of things to consider when deciding if it is worth it to balance your home loan with other sources of financing. The interest rates are going to fluctuate throughout the year and sometimes you will get a better rate and sometimes you won’t. You will also have to decide if it is worth it to pay a higher rate on your current loan or if you would rather pay off some of your expenses. If you know that you will be able to refinance every few years, then you can see some of the benefits. It can be a good option if you are planning to move soon and you want to pay off your current mortgage quicker.