What is Loan Balance Transfer?
Balance transfer is the process of moving your existing loan from one lender to another offering a lower interest rate. This can significantly reduce your interest burden and EMI.
When to Consider Balance Transfer
- Interest rate difference is at least 0.5-1%
- Significant loan tenure remaining (5+ years)
- Your credit score has improved since taking the loan
- Market interest rates have dropped
Balance Transfer Process
- Compare offers from multiple lenders
- Apply to new lender with required documents
- New lender pays off your old loan
- Start paying EMI to new lender
Costs Involved
| Fee Type | Typical Amount |
|---|---|
| Processing Fee | 0.5-1% of loan amount |
| Legal Charges | ₹5,000-15,000 |
| Property Valuation | ₹2,000-5,000 |
| Old Loan Foreclosure | Nil for floating rate |