Hi All,

I have a query on the balance transfer of Home loan from one bank to another. I know that there are lot of discussion threads regarding the same issue, and I would like to get opinion from the experts.

1. I took a Home loan from HDFC for 25 lacs (20 yrs) in the year of 2012 (For a ROI of 10.25%).

2. Today, my current outstanding principal amount is 17.5 lacs and the current ROI is 10.75%.

3. I’m planning to go for another property and for the new property I would be availing a loan of 40 lacs. All banks are ready to offer this new home loan for 10.15%

4. Before availing the new home loan, I would like to prepay 10 lacs and bring down the outstanding principle of my previous Home loan to 7.5 lacs. This way, my eligibility for the new home loan is acheived.

5. Question now is, should I plan to Balance transfer the first home loan to another bank offering 10.15% (IDBI offers this Balance transfer without any processing fee. I need to read the fine prints yet) or pay the conversion fee of Rs.5000 to HDFC and reduce the rate from 10.75% to 10.15%?

6. My plan is to close the first home loan in another 1 year and I will left with only 1 home loan of 40 lacs (and a satisfaction that the first home is my own and loan free). In this case, conversion or balance transfer makes sense?

7. Does anybody else have better suggestions? Suggestions in sense, is there any better way to handle my situation.

Thanks in advance.