If you have a home loan and are tired of paying EMIs every month, listen up – balance transfer can be a game changer. Meaning, shift your old loan to a new bank where you get a lower interest rate.
For example, if your current rate is 9.5% and the new bank is offering 8.5%, you can save up to ₹4.6 lakh in interest on a loan of ₹45 lakh.
After the RBI’s repo rate cut in 2025 (now at 6%), it is even more beneficial. Let’s explain in simple steps how it works and its benefits – so you can decide whether to switch or not.
What is Balance Transfer and how do you do it?
It’s pretty straightforward. You transfer your existing home loan to a new lender (like HDFC, SBI, or Bajaj Housing). The new bank closes your old loan, and you start a new loan with better terms. The process is this:
- Check current offers: Use online calculators – like tools from BankBazaar or Paisabazaar. Enter your outstanding amount, current rate, and tenure, and see how much you’ll save.
- Talk to the new lender: Get a quote from them. Rates in 2025 range from 7.4% to 9.9% – Bajaj starts at 7.55% for salaried individuals.
- Have your documents ready: ID proof, current loan statement, property papers, and CIBIL score (700+ required).
- Apply for transfer: The new bank will honor the old one, and your loan will be transferred. It takes 15-30 days.
That’s it. And yes, if you’re an NRI or salaried/self-employed, the eligibility is the same – just a good repayment history is required.
Benefits: Why should you switch?
This isn’t just about lowering the rate, but about making the overall loan easier. Here are some real benefits:
- Low Interest Rate: Shift from a high rate to a low rate – for example, a 1% reduction can save lakhs. Banks are competitive due to the repo rate cut in 2025, so now is the best time.
- Adjust EMI or Tenure: Lower rates reduce EMIs (with the same tenure) or shorten the tenure (with the same EMI). For example, saving 1% on a ₹50 lakh loan can reduce the monthly EMI by ₹1,000-2,000.
- Top-Up Loan: Need extra money? You can get a top-up of up to ₹1 crore from a new lender – for example, for renovations or business purposes. This option is great with ICICI or HDFC.
- Flexible Repayment: Some banks offer longer tenures, making EMIs more manageable. Plus, you can switch from a fixed-to-floating rate – first fixed for 3 years, then floating for future deductions.
- Tax Benefits Same: Even after the transfer, you get interest deduction (up to ₹2 lakh) and principal (up to ₹1.5 lakh) under Section 24(b). Taking a top-up is even more beneficial.
And yes, if you continue paying EMIs on time, your CIBIL score improves – a plus point for future loans.
Charges and Drawbacks: Not Everything Is Free
Everything with benefits comes with a small cost, keep in mind:
- Processing Fees: 0.25–1% of the loan amount (up to ₹5,000–10,000).
- Transfer Fee: Foreclosure charges from the old bank (up to 4% if the rate is floating).
- Legal/Valuation Fees: ₹5,000–15,000 for property inspection.
The total cost can be up to ₹20,000–50,000, so check with a calculator to see if the savings are more than this. If the loan is more than 1 year old, foreclosure is free at many banks.
| Bank/Lender | Balance Transfer Rate (p.a.) | Top-up Options |
|---|---|---|
| HDFC Bank | Starting from 8.75% | Up to ₹50 lakh |
| SBI | Starting from 8.50% | Up to ₹1 crore |
| Bajaj Housing | Starting from 7.55% | Up to ₹1 crore |
| ICICI Bank | Starting from 8.75% | Up to ₹1 crore |
| LIC Housing | Starting from 9.10% | Up to ₹50 lakh |
Pros and Cons
Pros:
- Interest saving reduces overall loan cost – benefits up to lakhs.
- EMI reduced or tenure shortened – reduces monthly stress.
- Top-up provides extra funds without a new loan.
- Better customer service and flexible options at new banks.
- Timely payments improve your CIBIL score.
Cons:
- Transfer charges and processing fees apply.
- Processing can take 15–30 days.
- If the savings are less than the charges, it’s not worth it.
- Multiple loans are allowed, but difficult to manage simultaneously.
Conclusion
Home loan balance transfer is a smart move in 2025, especially after the repo rate cut – reduce your EMI, increase your savings, and take a top-up if needed. If your loan rate is high and your CIBIL is good (700+), consider switching now.
Try the calculator on sites like Paisabazaar or BankBazaar and get quotes. Let us know in the comments how much debt you have and what are your plans to switch? And yes, if you need more details, just ask – I’ll help.
All this information has been taken from official sources related to Home Loan Balance Transfer.
