Hector impressed on loan at Hillsborough last season after making 39 appearances in all competitions and he was named the Championship club’s player of the year.
The Owls have been hoping to strike a deal for Hector all summer, with a large section of the fanbase urging the club to bring back the centre-half on a permanent basis.
The 27-year-old has never made a competitive appearance for Chelsea and he is hopeful of ending his spell with the Europa League winners after four loan moves in recent seasons.
Chelsea signed Hector from Reading for £4 million in 2015 but a series of managers from Jose Mourinho to Frank Lampard have not been able to find a place for him in the first team.
However, there are concerns that Hector might remain at Stamford Bridge until his contract expires next summer as talks heat up between the two parties before Thursday's 5pm BST deadline, with Chelsea understood to want to recoup at least the £4m they paid for the player four years ago.
Hector is a Chelsea fan and he is one of several players who could leave the Blues ahead of the transfer window closing in England on Thursday.
Danny Drinkwater may leave before the deadline, with Premier League duo Norwich City and Brighton exploring how to fund loan deals to pay a proportion of the £35m ($43m) midfielder's £100,000-a-week wages.
Everton are interested in loaning Fikayo Tomori after Lampard signalled his intent to keep Kurt Zouma, who impressed on loan at Goodison Park last season.
The France international remaining at Stamford Bridge means that Tomori is being allowed to leave on loan for another year, despite featuring heavily in pre-season and having done well at Derby County last season.
Baba Rahman has attracted interest regarding a permanent move away from Chelsea from clubs in England and France, while the Blues are looking to sell Tiemoue Bakayoko and have had talks with Galatasaray over a loan move .
Chelsea have raised well over £100m ($121m) from player sales this summer although they cannot buy anyone in the current transfer window due to the ban imposed upon them by FIFA.