However, since they did not have a loan transfer facility, he went back to LIC Housing and asked them to readjust his loan to a new, lower rate scheme. It made sense for him to do this, as the loan was a relatively new one and the outstanding on which he would take a recurring interest rate burden, was quite large. So, despite a one-time payment charge, his recurring cost would come down. Be aware that the old institution will not allow you to walk away easily. A loan transfer makes sense when the loan amount outstanding is still large.
Institutions are always on the lookout for a good loan.
Try and convince your own finance company to provide the benefit of a lower interest rate regime. They will respond. Check out what is the pre-payment penalty for an old loan. Some institutions have waived it off. Check out the tax benefits relating to a loan transfer.