How to Transfer Home Loan from One Bank to Another?

Published on: November 27, 2025

How to Transfer Home Loan from One Bank to Another

Paying off a home loan is one of the biggest financial commitments most people make. But what if you find a better deal elsewhere? What if another bank offers you a lower interest rate or better terms? The good news is that you don’t have to stick with your current lender. You can transfer your home loan to another bank.

This process is called a home loan balance transfer. It’s a facility that allows you to move your outstanding loan amount from one lender to another. Many borrowers do this to save money on interest or get better service.

In this blog, we’ll explain how to transfer your home loan from one bank to another in simple steps. Let’s get started.

What is Home Loan Balance Transfer?

A home loan balance transfer means moving your existing home loan from your current bank to a new bank or financial institution.

Here’s how it works: The new lender pays off your outstanding loan amount to your old lender. Then, you start paying EMIs to the new lender under the new terms and conditions.

People usually transfer their home loans when they find:

Lower interest rates
Better customer service
Additional facilities like top-up loans
More flexible repayment terms

When Can You Transfer Your Home Loan?

You can apply for a home loan balance transfer after paying 6-18 monthly installments to your current lender. Your loan account should be in good standing with no overdue payments.

Also, you should have a significant amount still pending on your loan. If you’ve already paid off 90-95% of your loan, a transfer might not be worth the effort and costs.

Steps to Transfer Home Loan from One Bank to Another

Let’s break down the home loan transfer process into simple steps:

Step 1: Research and Finalize New Lender

Start by researching different lenders. Compare what they offer.

Look at:

Interest rates
Processing fees
Loan terms and conditions
Customer reviews
Top-up loan facilities

Choose the lender that offers the best deal for your situation. Make sure the interest rate is significantly lower than your current rate—ideally at least 0.5-1% lower.

Step 2: Apply for Loan Transfer with New Lender

Once you’ve chosen a new lender, apply for the balance transfer.

Here’s what to do:

Visit the bank’s website or branch
Check all terms and conditions carefully
Fill out the home loan balance transfer application form
Provide details about your existing loan, lender, and property
Submit all required documents
Pay the processing fee (usually 0.5% to 4% of the loan amount)

The new lender will review your application and may give you a loan offer.

Step 3: Contact Your Existing Lender

Inform your current lender that you plan to transfer your home loan.

Be prepared to:

Explain your reasons for the transfer
Ask about any foreclosure charges
Request a loan statement showing your outstanding amount

For floating rate home loans, banks cannot charge foreclosure fees as per RBI regulations. However, for fixed-rate loans, some banks may charge 1-3% as a prepayment penalty.

Step 4: Obtain Documents from Existing Lender

Request all important documents from your current lender.

These include:

Property papers
Original land deeds
Loan agreement
NOC (No Objection Certificate)
Foreclosure letter

Step 5: Get Consent Letter and NOC

Your current lender will provide a consent letter or NOC.

This letter should mention:

Your outstanding loan amount
Property details
Confirmation that they have no objection to the transfer

Share this NOC and foreclosure letter with your new lender to verify the transfer details.

Step 6: Foreclosure of Old Loan Account

The new lender will pay off your outstanding loan amount to the old lender.

Once the payment is made:

Your old loan account is closed permanently
The new lender gets possession of your property documents
You receive a loan closure certificate from your old lender

Step 7: Sign New Loan Agreement

Finally, sign a fresh loan agreement with your new lender.

This agreement will include:

New interest rate
Repayment tenure
Outstanding loan amount
EMI amount
All terms and conditions

Once signed, you’ll start paying EMIs to your new lender under the new terms.

How Long Does the Transfer Take?

The home loan balance transfer process typically takes 5 to 10 days.

However, the duration depends on:

How quickly your old lender provides documents
Your new lender’s processing speed
Completeness of your documentation

Documents Required for Home Loan Transfer

To transfer your home loan, you’ll need to submit these documents:

Identity Proof:

Aadhaar card
PAN card
Passport
Voter ID

Address Proof:

Aadhaar card
Utility bills
Passport

Income Proof:

Salary slips (last 3-6 months)
Bank statements (last 6 months)
Income tax returns (last 2-3 years)
For self-employed: Business financial statements

Property Documents:

Original property papers
Sale deed
Allotment letter
Approved building plan

Loan Documents:

Existing loan statement
Loan sanction letter
NOC from current lender
Foreclosure letter

Fees and Charges Involved

Be aware of the costs involved in transferring your home loan:

Charged by New Lender:

Processing fees: 0.5% to 4% of loan amount
Legal verification charges
Property valuation fees
Registration charges
CERSAI charges (for mortgage registration)

Charged by Old Lender:

Foreclosure charges (for fixed-rate loans): 1-3% of outstanding amount
No foreclosure charges for floating rate loans as per RBI rules

Make sure the savings from lower interest rates outweigh these costs.

Benefits of Home Loan Transfer

Lower Interest Rate: The biggest benefit is a reduced interest rate. Even a 0.5-1% reduction can save you lakhs of rupees over the loan tenure. For example, on a ₹50 lakh loan for 20 years, a 1% reduction in interest rate can save you around ₹8-10 lakhs.
Lower EMIs: A lower interest rate means lower monthly EMIs. This reduces your financial burden and frees up money for other expenses.
Top-up Loan Facility: Many lenders offer top-up loans when you transfer your home loan. You can get additional funding at a lower interest rate for renovations, emergencies, or other needs.
Better Customer Service: If you were unhappy with your current lender’s service, transferring to a new bank can give you a better experience. Modern banks offer advanced online portals, mobile apps, and better customer support.
Flexible Repayment Options: Some banks offer more flexible repayment options, such as part-payment without penalty or the option to extend or reduce your loan tenure.
Points to Consider Before Transferring: Before you decide to transfer your home loan, consider these factors:

Calculate Total Savings

Don’t just look at the interest rate. Calculate the total savings after deducting all fees and charges.

Use a home loan EMI calculator to compare:

Current EMI and total interest
New EMI and total interest
All transfer charges

Only proceed if the net savings are significant.

Check Foreclosure Charges

Ask your current lender about foreclosure charges. For fixed-rate loans, these can be substantial.

If the foreclosure charges are too high, they might wipe out the benefits of transferring.

Remaining Loan Tenure

If you’ve already paid off most of your loan (80-90%), a transfer might not make sense. The initial years of a loan have higher interest components. In later years, you’re mostly paying principal.

Interest Rate Difference

The new interest rate should be at least 0.5-1% lower than your current rate to make the transfer worthwhile.

Hidden Charges

Read the fine print. Check for any hidden charges or conditions that the new lender might impose.

Processing Time

Consider the time and effort required for documentation and processing. Make sure you have time to handle the paperwork.

Tips for a Smooth Home Loan Transfer

Maintain Good Credit Score: A good credit score (750 or above) increases your chances of getting approved and getting better interest rates.
Keep All Documents Ready: Have all required documents organized and ready. This speeds up the process.
Compare Multiple Lenders: Don’t settle for the first offer. Compare at least 3-4 lenders to find the best deal.
Negotiate: Try to negotiate processing fees and other charges with the new lender. Many banks are willing to reduce or waive fees to attract customers.
Read Terms Carefully: Carefully read all terms and conditions of the new loan agreement before signing.
Get Everything in Writing: Make sure all promises made by the new lender are documented in the loan agreement.

Common Mistakes to Avoid

Not Calculating Total Costs: Don’t just focus on the lower interest rate. Calculate all costs and savings.
Ignoring Foreclosure Charges: Some borrowers forget to factor in foreclosure charges, which can be substantial.
Transferring Too Frequently: Transferring your home loan multiple times can be costly and time-consuming. Do it only when the benefits are clear.
Not Reading Fine Print: Always read the complete loan agreement. Hidden charges and conditions can surprise you later.
Falling for Marketing Gimmicks: Some banks advertise very low rates but have strict eligibility criteria or high processing fees. Check all details.

Is Home Loan Transfer Worth It?

A home loan balance transfer is worth it if:

The new interest rate is at least 0.5-1% lower
You have a significant loan amount pending (at least 40-50% of the original loan)
You have a long repayment tenure remaining (at least 5-10 years)
The total savings exceed the transfer costs
You’re getting additional benefits like top-up loans or better service

It’s not worth it if:

You’ve already paid off most of your loan
The interest rate difference is minimal
Foreclosure charges are too high
You have only a few years left on your loan

Final Thoughts

Transferring your home loan from one bank to another can be a smart financial move. It can help you save lakhs of rupees in interest, reduce your EMIs, and improve your overall borrowing experience.

The process is straightforward if you follow the steps systematically:

Research and finalize a new lender
Apply for the loan transfer
Contact your existing lender
Obtain all documents and NOC
Complete the foreclosure process
Sign the new loan agreement

Before you decide to transfer, carefully calculate the total costs and savings. Make sure the benefits outweigh the expenses and effort involved. Consider your remaining loan tenure, outstanding amount, and the interest rate difference.

With proper research, comparison, and planning, a home loan balance transfer can be an excellent way to optimize your home loan and achieve your financial goals. Take your time, do your homework, and make an informed decision that’s right for your financial situation.

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