Home Loan from one Bank to Another
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While buying your dream house, a home loan plays an important role, but with increasing interest rates, the amount becomes significantly large with each passing day. In such times, transferring the home loan from one bank to another with lower interest rate proves fruitful.

A Home Loan Balance Transfer or Refinancing is the process that allows an individual to benefit from the lower interest rates offered by other banks and financial institutions. This unique service helps a borrower in avoiding high-interest rates charged by their lender and migrates to a lower interest rate structure with another lender.

While the option of home loan balance transfer seems lucrative but the benefits of this may vary from borrower to borrower and on the various terms and conditions. However, an individual must know some important facts before finalizing to transfer home loan balance:

Difference in Interest rates

If you have decided to transfer your home loan balance, then you must first check the differences in rate of interest. For instance, if there is a difference of just 5 to 25 basis points and 70 percent of the loan amount has already been paid off, then there is no need to transfer the loan balance. But, if the difference in interest rates is more than 25 basis points, then it is advisable to switch to that lender which is offering less interest rate on repayments.

Hidden charges

The second crucial factor which an individual must keep in mind before switching the home loan balance is the proper calculation of hidden charges by the banks. Many lenders levy hidden fees while transferring the loan amount.

According to home loan experts, borrowers should evaluate competitive offers from banks and NBFCs before finalising any offer as many have hidden charges.

So, just by looking at the various eye-catchy offers by banks, an individual must not change your lending institution.

Fixed and floating interest rate

A home loan comes with two types of interest rates that banks offer- Fixed and floating rates. The fixed interest rate remains constant for the entire loan tenure. This rate of interest doesn’t vary according to the rise and fall in the market. On the other hand, a floating interest rate fluctuates with the market scenario. The floating rates offered by a bank or non-banking financing company are usually lower than the fixed rates it offers its customers.

But before opting this alternative, an individual must check that if the maximum portion of the loan amount has been paid off at fixed rate of interest then no need to switch as they have to pay additional processing fees to the other lender/banks.

Nikita S Gupta
Nikita S Gupta is a media professional with over 10 years of work experience. Her educational background in Journalism and mass communication has given her a broad base to write on variety of topics. In the past, she has worked with media houses like Zee News and India TV. She specializes in news writing, features, lifestyle, home décor and celebrity articles. When not writing, she enjoys spending time with her family. She loves to travel and explore new places.