Home Loan Balance Transfer, India

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Home Loan Transfer to SBI, HDFC, Axis Bank, PNB, Others

Last Updated 27th Oct 2016
  • Home loan takeover options at 9.30%
  • Save interest. Reduce 48 EMI's
  • Top-up loans at 9.30% - 9.55%; use for paying down other expensive loans or personal use
  • Available on ready / under – construction property
  • Avail flexi saver home credit facility from Citibank, SBI, IDBI Bank, Axis Bank, DBS Bank and pay interest on net difference on your loan outstanding and bank balance
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 Salaried   Self Employed - Professional   Self Employed - Business 
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What is the interest saving in EMI by transfer of home loan to another bank?

The exact reduction in EMI varies based upon
  • Existing rate of interest being charged by your bank
  • Outstanding principal amount
  • Your current EMI
  • Rate of interest currently available from new bank

What are the benefits of transferring house loan to a new bank?

  • Reduction in interest rate from high rate to as low as 9.30% per annum
  • Reduction in monthly EMI by upto 5% depending upon the rate difference, balance tenure and EMI
  • Option to avail top up loan at same rate as home loan rate (9.30% to 9.8%) subject eligibility conditions and loan to value

What is the cost and fee for home loan transfer from one bank to another?

Various costs and fees associated with transferring a loan vary from case to case and from state to state. Main charges and fees that you just factor in the calculation of savings are:
  • Foreclosure charges payable to existing bank in case of fixed rate home loans. No charges are payable in case of floating rate home loans
  • Processing fees and administrative fees of new bank. These may range from a flat fee of say, Rs. 10,000 to upto 1% of the loan amount. However, banks offer discounts on fees from time to time and you must check the offers available in the market with MyLoanCare
  • Stamp duty (0.2% to 0.5%) on mortgage payable in some places including Mumbai, Pune, Maharashtra, Chennai, Tamil Nadu, Bangalore, Karnataka, Hyderabad, Telangana and Rajasthan among others. No such stamp duty is payable in places in Delhi, Gurgaon, Haryana, Noida, Uttar Pradesh
  • Incidental charges such as SRO registration payable in Mumbai, Pune and other parts of Maharashtra

What is the process for home loan takeover?

Follow the below simple steps to transfer your loan:
  • Check your current rate and calculate interest savings
  • Calculate the estimated cost on account of various fees and charges as given above
  • Shortlist new bank that you wish to transfer your loan to; decide if you want top up loan or not
  • Obtain list of property documents deposited with your existing bank (in case this is not available with you already) and foreclosure letter from existing bank
  • Apply for loan with new bank with photocopy of property documents as per list of property documents with existing bank
  • Obtain sanction letter and execute new loan agreement
  • Take disbursement from new bank by way of cheque/ demand draft in favour existing bank and deposit the same with existing bank
  • Obtain property documents from old bank and deposit with new bank

What are the Precautions to be taken when transferring home loan?

  • Check interest rate track record of the new lender
You must check that the lower interest rate being advertised by the new lender is real and not a shot term gimmick. Please ask your loan advisor for the benchmark rate track record of the new lender.
  • Satisfy yourself about service quality of the new lender
Check that the service quality offered by the new bank you are choosing is up to your expectations. Lower rate should not come at the cost of inferior service.
  • Check the benchmark rate
There are two commonly used benchmark rates for home loans – base rate and prime lending rate. Base rate benchmarked loans are known to be more transparent and hence preferable over prime lending rate benchmarked loans.
  • Is the spread variable or fixed
Interest rate on floating rate loans consists of two parts – benchmark rate and spread above it. While the benchmark rate is expected to change over time, the spread is supposed to remain constant except in case of a default. However, some banks offer floating rate loan with both the benchmark and the spread being variable. In case of many such loans, borrowers see their loan interest rates rise sharply after a few months. So, avoid loans with variable spreads and instead opt for floating rate loans that vary interest rate only with change in the benchmark rate.
  • Estimate transaction cost
Check the cost that you will incur for effecting the change. These include processing fees, stamp duty (in some states like Maharashtra) and documentation charges.
  • Issue notice to existing bank
Some banks insist on a prior notice before you can prepay your home loan. Check your loan agreement carefully and ensure that due notice is given to or waived by your existing bank.

Are there any additional precautions when availing home loan balance transfer on under construction property?

In case the property whose loan you are transferring is still under construction by the builder, some additional points must be taken care of:
  • Check loan eligibility as per new bank
Cost of property consists of multiple heads such as basic price, preferred location charge (PLC), external development charges, internal development charges, security deposit, electrification charges, power back-up charges, service tax, fire fighting charges etc. Norms for inclusion of each cost head differ across lenders. In case your chosen new bank does not include some of the heads in the cost of property which were included by the old bank, the loan eligibility may come down and you may need to increase your own contribution.
  • Select the right time to do the loan transfer
The process of loan transfer may take 10-15 days from the date of application and your existing bank may typically take another 10-20 days to handover property documents to the new bank. You will not be able to avail further loan disbursements during this period. Hence, it is important you time the transfer of your loan at a time when you don’t expect any fresh demand from the builder for the next month or so.
  • Get fresh Permission to Mortgage and Tri-partite agreement
our builder will need to issue a fresh permission to mortgage (PTM) to the new bank and enter into a new permission to mortgage. This typically takes no more than 2-5 days but borrowers must check with the builder.
In summary, balance transfer is beneficial to borrowers as it helps reduce cost of borrowing significantly. Home buyers and home loan borrowers must exercise caution in the process of balance transfer so that the process is smooth.

Documents List for Home Loan Transfer

Additional Documents for Loan Takeover / Transfer
Salaried Self Employed
Loan statement (loan track) and list of property documents (LOD) in possession of existing lender
Last 12 months' statement of bank account from which loan EMI is paid
Application Form and KYC
Salaried Self Employed
Application Form with photo and signed by Primary Borrower and Co-borrower(s)
Identity Proof of Primary Borrower and Co-borrower(s)
Residential Address proof of Primary Borrower and Co-borrower(s)
Age Proof of Primary Borrower and Co-borrower(s)
Office address – ownership/ lease / rent agreement/ utility bill
Income Proof
Salaried Self Employed
Last 3 years’ Form 16, last 6 months salary slip, last 6 months’ bank account statement showing salary credit
Last 3 years ITR (self and business), profit and loss account, balance sheets certified/audited by a CA. Last 12 months bank account statement (self and business)
Certificate and Proof of Business Existence
Business Profile
Home Loan @ 9.30%* Cashback Upto Rs. 5,000

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Home Loan Balance Transfer News - Oct 2016
14th Oct 16 PNB Housing Finance cuts home loan rates by 10 basis points
PNB Housing has reduced its home loan rates by 10 bps. The floating home loan rates have been reduced to 9.45 per cent from 9.55 per cent while fixed rates decreased to 9.4 from 9.5 per cent. PNBHFL has also cut its loan against property rates by 25 bps to 11 per cent from 11.25 per cent. This rate cut will be effective from 14th October, 2016.
14th Oct 16 SBI merger with its associate banks - the stage is set
The stage is set for the merger of State Bank of Hyderabad and four associate banks with SBI. There will no change in the interest rates on customer loans and the rates for new customers will be as per SBI rates. All the necessary instructions will be available in the SBI notice available on SBH website validating the existing cheques for the specified time period after the merger.
11th Oct 16 PNB makes home, auto loans attractive for government staff
PNB has launched a new scheme named PNB Pride for government employees. Under this scheme, the bank will offer home loans at an interest rate of 9.3 to 9.8 per cent and auto loans at 9.55 per cent effective from October 1, 2016. PNB will also offer loans without any processing fee and documentation charges.
07th Oct 16 DHFL Cuts Home Loan Rates by 0.2 per cent
Dewan Housing Finance Corporation Ltd (DHFL) has reduced home loan lending rate by 0.2 per cent to 9.35 per cent for a loan up to Rs. 30 Lakhs under the festival offer. The revised rate would be effective for its new customers from October 11. This offer is categorized under affordable housing that would enable home ownership to the low and middle income group.
07th Oct 16 HDFC plans to raise 1500 cr in debt to augment capital
HDFC Ltd will raise 1500 crore by issuing debt securities on a private placement basis. The secured non convertible debentures will carry the coupon rate of 7.5 costs per annum. HDFC will start issuing debt securities on October 13 and will end on 12th October 2018.