A balance transfer (also called a buyout or refinance) means a new lender pays off your existing home loan and you then repay the new lender. People do it to get better pricing, change tenure, switch from conventional to Islamic finance, or move to a lender with better service.
It is not automatically a saving. You pay costs to leave the old lender and to join the new one, so the comparison has to include everything.
What's included
| Item | What the adviser does | Notes |
|---|---|---|
| Current loan review | Reads your existing agreement, outstanding amount and prepayment terms | Ask your lender for a written statement |
| Exit cost check | Identifies prepayment or early settlement charges | From your current agreement |
| New offer comparison | Compares pricing, tenure and charges from other lenders | Conventional or Islamic |
| Total cost comparison | Side-by-side of staying vs switching | Over the remaining tenure |
| Application support | New file, valuation and legal review | New lender repeats checks |
| Settlement coordination | Helps arrange payoff letter and release of original documents | Track the document handover |
When you need it
- Your current pricing is higher than what other lenders now offer.
- You want to shorten or extend your remaining tenure.
- You want to move from a conventional loan to Islamic finance.
- You need a top-up for renovation or construction that your lender won't give.
- Service problems with your current lender.
Step-by-step process
- Get your current loan statement and a copy of your agreement.
- Check exit terms: prepayment charges, notice periods and document release process.
- Compare offers from new lenders in writing.
- Do the maths: total cost of staying vs total cost of switching, including all charges.
- Apply to the new lender with income and property documents.
- Valuation and legal review by the new lender.
- Offer letter from the new lender; read every term.
- Payoff letter from your current lender with the exact settlement amount.
- Settlement. New lender pays off the old loan.
- Document handover. Original title documents move from the old lender to the new one; confirm in writing.
Approvals and documents
You will usually need the current lender's statement and payoff letter, your income documents, and the property documents the new lender's legal team asks for. If the property is in a society, the society may need to record the change in the lien or mortgage on its records; ask both lenders how they handle this.
What affects the cost
- Remaining outstanding amount and tenure.
- Your current lender's prepayment or early settlement charges.
- New lender's processing, valuation, legal and insurance or takaful charges.
- Pricing structure of the new product.
- Your income and credit history at the time of transfer.
- Property's current valuation.
Questions to ask
- What is my exact payoff amount and any early settlement charge?
- What are all the new lender's charges, in writing?
- How much will I pay in total over the remaining tenure in each case?
- How long will the transfer take, and who holds my original documents in between?
- Can I get a top-up as part of the transfer?
- How are you paid for arranging this?
Red flags
- Comparing only the headline price and ignoring charges.
- Pressure to stop paying your current lender before the transfer completes.
- No written payoff letter.
- Unclear handling of original title documents.
- Asking you to pay settlement money to anyone other than the lender.
FAQs
Does a balance transfer always save money? No. It saves money only if the total cost of switching, including exit and new charges, is lower than staying.
Can I transfer to an Islamic lender? Often yes. The new lender would structure the finance under its Islamic product, subject to its approval.
Will my original property documents be safe? They move from the old lender to the new one at settlement. Ask for written confirmation at each handover.
What if my current bank delays my payoff letter? Complain in writing to its Complaint Management Unit. If there is no reply in 45 days or you are not satisfied, SBP says you can approach the Banking Mohtasib Pakistan (SBP).
This page is general information; confirm with the relevant authority or a qualified professional before you act.