Pros and Cons of Home loan balance Transfer

Home loan

Everyone desires for a house of his or her own, for those who don’t have enough money to own a house of his or her own the simplest way out is taking a home loan and pay interests every month to a specific date until you’ve repaid it all. Simple, right? No, sometimes things aren’t that simple and there can be many complications that arise between the bank and the person who has taken the loan. Sometimes some other bank is offering a lower interest, on others due to change in company policy the bank might take a different approach during the duration of payment of loans and might want to increase the interest or add additional charges or reduce the payment time which increases pay per interest. There can be many reasons to the same and the customer might want to change bank and transfer the balance of the home loan to another bank which suits him/her.

Although the process of loan transfer isn’t that easy and it might include complicated procedures, people still do it. The advice is that you shouldn’t go about a thing without knowing its pros and cons and so we have come up with a list of pros and cons for you to weigh your options and consider so that you come to a wise and informed decision on whether to go for the same or not. Below given are some pros and cons for you to consider.


1. Lower rates of Interest

Mostly the major reason for home loans transfer is lower interest rates being offered by other banks. Added to this, as a mortgage is provided to the lender, the risk of the lender reduces, this is another reason for the same.

2. Offers pre-payment facilities

Many questions often arise in the minds of borrowers while transferring home loans regarding the policy of pre-payment and if it remains valid. The answer is that just like normal cases, the policy of pre-payment remains after the transfer of loan balance as well.

3. Reduction in monthly EMI

Although the rate of reduction varies from bank to bank, it is often noticed that the rate of EMI decreases on transferring home loan balance from one bank to another.

4. Safeguarding of CIBIL Score

There is no need for CIBIL requirement for a balanced transfer, your CIBIL score will always remain intact even after transferring Home loans.

Let us look at some of the cons of the same now


1. Processing Fee and Additional Charges

Depending on Bank to Bank, the processing fee is levied on the transfer of home loans from one bank to another and because the process is quite complex, additional charges might as well apply here and there.

2. Time Consuming

Because the process of Home Loan transfer includes some legal and formal documentation and some other complex steps, the transfer can consume lots of time before it is actually done.

3. Need for the Mortgage Again

You need to mortgage again for the new bank, this means that you’ll have to pay for the additional stamp duty and registration charges again.

These were the Pros and Cons of Home Loan transfer, we hope that you take a wise decision weighing the positive and negatives before actually transferring your loan.

About Jennifer Cribsly

I'm a former real estate broker who specialized in helping first time buyers be able to purchase a home. Now full time mom, part time real estate owner/investor.
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