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5 Key Considerations Before Transferring Home Loan

1 Mins 28 May 2024 0 COMMENT
Home loan transfer

A balance transfer involves transferring a home loan from one financial institution to another to take advantage of better interest rates and additional benefits. Borrowers often adopt this strategy during increased expenditure or inflation, as this increases interest rates.   It is important to compare all available home loans to ensure you secure the best deal possible. This article will discuss the key factors you should consider before opting for a home loan balance transfer.

Things to consider before applying for home loan transfer

If you're grappling with high interest rates, you can consider the transfer of your home loan to another bank. This could help you reduce the interest charges. However, before making this transition, here are five things you should consider before transferring your home loan.

Negotiate For A Lower Interest Rate

Before deciding on a home loan balance transfer, try negotiating for a lower interest rate with your current financial institution. If you've maintained a good relationship with them, they might be more willing to consider your credit history and repayment capacity favorably.

NOTE: A Repo Rate-Linked Lending Rate Loan directly correlates with the Reserve Bank Of India's (RBI) repo rates. The repo rate is essentially the rate at which banks borrow funds from the RBI. This means that the interest rates on your home loan are significantly influenced by fluctuations in the repo rate. When there is a reduction in the repo rate, it could work in your favor by leading to a decrease in the interest rates thereby lowering your EMI burden.

Check Your Credit/CIBIL Scores

It is crucial to review your scores before applying for a home loan transfer. These scores serve as a key eligibility factor for your transfer application. A lower credit score could significantly impact your transfer application, suggesting that you might not be as qualified for the transfer.

Checking The Charges Involved

When considering a loan from a financial institution, it is important to be aware of the additional charges involved. If you're thinking about transferring your home loan to a different lender, you should expect to encounter various charges, including processing fees, application fees, administration fees, inspection fees, and more. This applies to your current lender and the new lender. Always ensure that the total amount you'll be paying is less than that of your interest amount.

Carefully Read The Terms And Conditions

A common oversight most borrowers make when applying for a home loan is neglecting the terms and conditions section. This can be a significant misstep as this section contains all critical information that warrants careful consideration.


It is generally recommended to avoid transferring your loan if you're close to completing the loan term or if you plan to sell the property in the future.


While the transfer of a housing loan from one bank to another to take advantage of favorable interest rates might appear advantageous, it is always better to carefully evaluate the factors mentioned above before making a decision. This approach will help ensure that your decision is in harmony with your financial goals and objectives.