A home loan takeover (also called balance transfer) is the process of transferring your existing home loan from one lender to another offering better terms, typically lower interest rates, improved services, or additional benefits like top-up loans. The new lender pays off your outstanding balance, and you begin repaying them under the new terms.
The primary advantage is accessing lower interest rates, resulting in substantial EMI and overall interest savings. For example, improving your credit score from 650 to 750+ can secure a 1.50% lower rate, potentially saving over Rs. 3 Lakh in interest on a Rs. 50 Lakh loan.
Switching from an NBFC (11-15%) to a Bank (8-9%) or utilizing an improved credit score can significantly drop your rate. Even a 0.50% reduction saves ~Rs. 1.6 Lakh on a Rs. 50L loan.
Transferring to a lower rate immediately decreases your monthly EMI obligation, improving cash flow and freeing up funds for other financial goals.
Access additional funds for renovation, weddings, or medical needs. Rates for top-ups during takeover (e.g., 8.50%) are often much lower than separate personal loans.
Most floating-rate home loan takeovers do not attract prepayment penalties, allowing you to repay early without extra charges.
When you secure a lower rate, you can choose how to utilize the savings.
Strategy: Keep EMI same/higher, reduce years.
Strategy: Keep tenure same, reduce monthly pay.
| Criteria | Requirement |
|---|---|
| Age | 23 to 65 years (Max maturity age typically 70) |
| CIBIL Score | 700+ preferred. Scores above 750 get the best rates. |
| Repayment History | Min. 12 EMIs paid to current lender. No defaults in past 12-24 months. |
| Income | Stable salary or business income. Debt-to-Income ratio typically below 50%. |
| Property | Self-occupied, let-out, or commercial. Must be free of legal disputes. |
Understanding the costs helps calculate your "Break-even Period" (typically 20-25 months).
| Component | Rate | Cap (Max Limit) |
|---|---|---|
| Stamp Duty | 0.5% of loan amount | Rs. 30,000 |
| Registration Fee | 1.0% of loan amount | Rs. 6,000 |
| Total Max | Combined | Rs. 36,000 |
0.75% - 2.0%
Often capped or waived for balance transfers. Subject to 18% GST.
Rs. 5k - 11k
Combined fees for property technical valuation and legal verification.
Rs. 2k - 5k
Paid to the old lender to release the original title deed.
Situation: Rajesh took a loan from an NBFC at 12% when his score was low. After 7 years of good repayment, his score is 780+.
Situation: Priya has a 7.75% rate from 2020. Current market rates for takeover are 8.00%+.
Situation: Arun needs Rs. 18L for renovation. He has an existing home loan at 9.25%.
Keeping old loan + taking new Top-up at 10.5% results in a total EMI of Rs. 56,000.
Moving home loan to 8.5% and taking Top-up at 8.75% results in total EMI of Rs. 55,400.
Situation: Vikram has only 3 years remaining on his loan. Outstanding balance Rs. 8.5 Lakh.
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