Is it possible to transfer a home loan multiple time?

July 11, 2022 . Home loans . 10 min read
transfer home loan

When it comes to a home loan, everyone wants to get the best possible deal. Even a slight decrease in the interest rate can translate to a large sum over time. For instance, for a home loan of Rs 50 lakh at 8% over 20 years, you’d have to pay almost the same amount in interest. However, if the interest rate is decreased by just 0.5%, the payable interest would be Rs 46.5 lakh. That’s a saving of Rs 3.5 lakh. If you’ve already taken a home loan and found another lender with better rates, rates, then you can transfer your home loan over to them. This enables you to save costs on interest.

What is a home loan transfer?

High-interest rates have a direct impact on the finances of a person. Many times, these interest rates coupled with long repayment periods can result in exorbitant interest outflows. Couple this with rising expenditure and inflation, and this can be a real problem. Home loan transfer is the facility that lets a borrower shift to another lender with lower interest rates. By shifting to another lender, borrowers can end up saving a significant amount in payable interest. After you shift the loan, then you’ll need to pay the remaining loan to the next lender. Be aware, though, that a home loan transfer involves some additional fees. Plus, it can be quite a cumbersome and tedious procedure.

Things to consider before a home loan transfer

Negotiate interest rates

Before you consider shifting to another lender, do negotiate with your current one. While interest rates are generally fixed, there is a chance for negotiation sometimes. Negotiation for interest rates should ideally be done before taking the loan. But you can also do so during the duration of repayment. If you’ve been a loyal customer to your lender with a good history, your request may be approved after checking through your loan payment capacity and credit history.

Credit score

You should always strive to have a good credit score. It indicates your fiscal discipline, and many lenders check it before approving a loan. Even for a home loan transfer, it is an essential component. Your new lender will likely check it before approving your request. Suppose you’ve been inconsistent with your repayment. This means chances of your balance transfer request will decrease.

Additional charges

You won’t be able to transfer your home loan just like that. Additional changes in the form of processing fees, administration charges, inspection fees, and others will be levied. There will be some charges which will be levied by your new lender too. Before you jump, the ships consider whether you will come out in overall profit due to the home loan transfer.

Terms and conditions

After you’ve selected a new lender for your home loan transfer, ensure that you properly go through the terms and conditions. Do this to properly understand the functioning of your new lender and avoid any potential hidden charges. Make sure that you understand what it is that differentiates your new lender compared to your previous one.

Tenure

If you’re nearing the tenure of your loan repayment period, then a home loan transfer is not advised. This is because of the additional fees that will be incurred. When you’re almost at the end of the repayment period, the additional charges are usually greater than the interest left on your loan. In such a case, a home loan transfer will only result in increased money outflow.

Can you transfer a home loan multiple time?

In short, yes. It is perfectly okay to transfer your home loan multiple times if you so wish. Though there are several reasons why you should be cautious about it in the first place:

  • You will have to pay additional charges each time you change lenders.
  • By doing this multiple times, you can potentially incur greater costs in additional charges. Thus, rendering the purpose behind home loan balance transfer useless.
  • The process itself is time-consuming and requires a lot of documentation and effort.
  • There’s also the fact that a home loan balance transfer makes less sense as you go deeper in your tenure. Changing the lenders at such a late stage simply doesn’t make sense.

So, while it is certainly possible to change your lenders multiple times, it only makes sense if you make an overall profit. Before you shift from lender to lender, ensure that your savings are greater than your costs.

Conclusion

A home loan transfer is a great way to reduce your interest burden. Home loans are long-term, large capital loans. This means that the total interest on them is generally very large, almost equal to the principal itself. For such loans, even a small difference means significant savings. Before you go through it, though, do consider the charges and the effort that you’ll spend on the process itself.

And while a balance transfer is good, remember to opt for your down payment assistance from HomeCapital when you initially take out your home loan. With no interest rate and easy processing, the platform adds provides up to 50% assistance to your savings towards your home down payment.

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