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Balance Transfer

Balance Transfer Online ComaprisionComparision
Banks Interest Rate(%) Processing Fee Range Loan Amount Tenure Range  
SHRIRAM Housing Finance
SHRIRAM Housing Finance
1% Less than current interest rate 0% Min 10 Lac 1 - 30 Years Get QuoteRequired Documents
PNB Housing Finance
PNB Housing Finance
1% Less than current interest rate 0% Min 10 Lac 1 - 30 Years Get QuoteRequired Documents
Standard Chartered Bank
Standard Chartered Bank
1% Less than current interest rate 0% Min 10 Lac 1 - 30 Years Get QuoteRequired Documents
ICICI Bank
ICICI Bank
1% Less than current interest rate 0% Min 10 Lac 1 - 30 Years Get QuoteRequired Documents
HDFC Bank
HDFC Bank
1% Less than current interest rate 0% Min 10 Lac 1 - 30 Years Get QuoteRequired Documents
Yes Bank
Yes Bank
1% Less than current interest rate 0% Min 10 Lac 1 - 30 Years Get QuoteRequired Documents
Kotak Mahindra Bank
Kotak Mahindra Bank
1% Less than current interest rate 0% Min 10 Lac 1 - 30 Years Get QuoteRequired Documents
Reliance Capital
Reliance Capital
1% Less than current interest rate 0% Min 10 Lac 1 - 30 Years Get QuoteRequired Documents
LIC Housing Finance
LIC Housing Finance
1% Less than current interest rate 0% Min 10 Lac 1 - 30 Years Get QuoteRequired Documents
Aditya Birla Finance
Aditya Birla Finance
1% Less than current interest rate 0% Min 10 Lac 1 - 30 Years Get QuoteRequired Documents
Balance Transfer Online OverviewOverview

Overview

A loan to buy a house that often spills into 20 years is keenly watched by the borrower since a sizeable amount of his income goes in servicing it. A home loan online involves a substantial amount of money and hence the interest rate on the product is a matter of concern for every borrower.

Home loan interest rates range anywhere between 9.1% to 11.5% and it is advisable that a borrower look to reduce the interest rate if he has paid his EMIs diligently for a few years. The most common ways to reduce interest rates is to either go for a balance transfer of the loan or talk to the bank that has provided you the loan to reduce it.

Why Use Balance Transfer

Balance transfer of a loan happens when the entire unpaid principal loan amount is transferred to another bank for a lower rate of interest. The bank that had originally extended the loan to you gets the unpaid amount and you have to, in turn, now pay your EMIs at the new rate to the bank that has taken up the loan. Almost every bank in the country has a facility for a balance transfer of home loans and if you have been paying your EMIs regularly, there is often no problem associated with it.

There is, however, a need to carry out a cost benefit analysis. Balance transfer will depend on the difference between the interest rates offered by the two banks, the amount of the loan left unpaid and the tenure remaining. If the unpaid amount is low or if only a few years remain in terms of tenure, balance transfer may not be ideal. This is also because banks often levy a processing fee for balance transfer and in the end it may not be all that beneficial.

Balance transfer works best if you are in the early periods of your home loan. In such a case even a 50 basis point reduction will be very beneficial. For example, if Rs 50 lakh is left unpaid for your home loan and your current interest rate is 12 %, you would have to pay Rs 58, 01,513 as interest. If you opt for a balance transfer and your new interest rate is at 11.5 %, your interest outgo over 15 years would be Rs 55, 13,708 or a total savings on interest of Rs 2.87 lakh.

This is a substantial amount and despite the processing fee that you may have to incur on the balance transfer process. There is, however, a considerable amount of work involved for balance transfer. The bank where your loan will be transferred will do a credit background check and if they are not satisfied with your credit worthiness, there is every chance of your balance transfer being refused. Also, you will have to get the documents of your house released from the bank where your loan was originally sanctioned and this involves considerable to and fro.

Balance transfer is a lengthy and time consuming process and its benefits should be carefully weighed. For balance transfer banks charge 0.5 percent of the loan or a flat Rs. 5000-10000 as processing fees.

The yardstick to calculate productivity of a balance transfer is a reduction of 100 basis points if tenure left is less than five years, 75 basis points if around 10 years left and 25-50 basis points if 15 - 20 years left.

Resetting your interest rate: Resetting your home loan with your existing bank also makes a lot of sense since it's a much simpler way process. Most borrowers never reset their rates simply because they do not know it can be done by simply writing to their banks. In any case you can also pit your bank against another one that may be offering you a lower home loan rate on balance transfer.

Given the current sentiments, banks do not like to see their borrower go to another bank and hence in all likelihood they will take you up on the offer. Banks when resetting your interest rate, sometimes lowers the tenure of your loan, which means your EMI will remain the same but your total interest outgo will drop. In the above example, if the bank has to reduce your tenure, it would mean your 15 year loan may be reduced by a year.

In cases where the interest rate is reduced and is reflected in terms of a lower EMI, you will have to provide a news ECS mandate and cancelled cheques. The above holds true for home loans on floating interest rates and if a fixed home loan borrower wants to lower his rates, he has to first switch to floating rate, which often involves charges of up to 2% of the unpaid amount.

As the Reserve Bank of India says shopping, comparing, seeking clarification and negotiating with banks may save you thousands of rupees and it must be followed when servicing a home loan. The choice between balance transfer and resetting a loan rate with the existing bank at the end of the day depends on the loan outstanding, tenure left, the difference in rates and the amount of time you have to get the job done.

Types of Balance Transfer

  • Home Balance Transfer
  • Loans Against Property(LAP)

Features & Benefits of Home Balance Transfer

  • Take or Transfer a home loan, to pay off existing home loan(s)
  • Future payments will be made by your New Bank
  • Transfer your existing home loan at interest rates that are lower than the original loan
  • Top-up the existing loan to get ready cash for any of your needs
  • The procedure of acquiring the loan is now easier and the amount payable for your installments is designed to make you feel comfortable
  • Avail Home Balance Transfer if:
    • You are trying to reduce your interest rate and lower your payments
    • You are trying to reduce your home loan term to pay off your loan faster
    • You want to use the equity in your house to get money for any of your needs. You can take a top-up over the existing loan to get the much needed cash to fulfill your needs.
The following documents are required for the purpose of credit appraisal
  • Completed application
  • Your income documents and bank statement
  • You address and age proof

Balance Transfer - Documents Required

For a salaried individual :

  • three months of salary slip,
  • three months of bank statement where salary is credited
  • identity proof
  • PAN card
  • address proof
  • about two photographs and
  • any other KYC documents the bank may deem fit

For self employed :

  • TAN Card
  • Last 3 years' Balance Sheet and Profit & Loss A/c Statements, with Annexure / Schedules and also last 6 months' Current A/c Statements of the business entity and Savings Account Statements of the individual
Balance Transfer Online FAQFAQ's

Q. What is Balance Transfer?

Ans. The concept of Balance Transfer has really made the lives of customers easier. Balance Transfer is basically the transfer of your loan or the amount owed in your credit card, to an account with another bank, which is then paid at the interest rates of the latter. Customers usually go for this when they find banks/financial institutions offering interest rates lower than their initial vendors.


Q. How do I know if a balance transfer is right for me?

Ans. If you have a high-interest credit card racking up debt and want to move this amount to a lower-interest card, balance transfer would prove to be a good option.


Q. How do I know how much I should transfer?

Ans. You can’t transfer more debt than your new card has in available credit. Your credit utilization ratio should be about 30% for all lines of credit, so only move a balance smaller than the credit line on your new card.


Q. Will I actually save money?

Ans. MyFundBucket offers you free balance transfer calculator, using which you can know how the interest rate you are currently paying on a balance and how much would be charged as banking fees, thus calculating your potential savings.


Q. Where can I find the best balance transfer deals?

Ans. Well you are right here! MyFundBucket provides you with a comparative side-by-side result of the best deals suited to your liking.


Q. Will a balance transfer hurt my credit score?

Ans. A single balance transfer might actually help your credit score by increasing the credit utilization ratio. But too many balance transfers might give off a signal that you are not interested in repaying the loans and are just shuffling around, which might leave a black mark.


Q. How long does it take to process a balance transfer?

Ans. Though it mostly takes 7-10 days, it also depends on the vendor and the amount of time taken when paid by cheque.

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