Home loan balance transfer: how to prepare for it

Balance transfer involves transferring the outstanding balance of a home loan from one lender to another in order to benefit from lower interest rates or better terms. Here, the new lender grants the loan to the customer and remits the outstanding loan amount to the old lender. After the transfer, the borrower’s obligation to repay is to the new lender.

Finalization of the new lender

The borrower can go to different financing companies or banks. A good repayment record and favorable credit rating help the borrower get a good deal from finance companies.


The borrower must apply for a foreclosure, request an account statement and a list of ownership documents from the existing lender. If the old lender does not release the ownership documents, the new lender can release payment against a letter from the previous one, having details of the legal documents held by them and the number of days it will take them to release the documents , after the loan settlement.


Borrower must submit loan application with documents including bank statement, repayment history, foreclosure letter, list of ownership documents with existing lender, photographs, ID and proof of ownership. ‘address.

New loan contract

Once sanctioned, a new loan agreement is executed between the borrower and the new lender. From now on, the new lender issues a check in favor of the old lender equivalent to the amount still due.


The new lender may charge a processing fee, which is waived in many cases.

Points to note

  • Consider fees and penalties while seeking a balance transfer.
  • All documents must be self-attested.

(Content on this page is courtesy of the Center for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)

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