Guides / Home Loan Balance Transfer: When Does Switching Pay Off?

Home Loan Balance Transfer: When Does Switching Pay Off?

A balance transfer moves your home loan to another lender. It can save interest, but only if the saving is bigger than the cost.

Example: ₹40 lakh, 15 years left, ₹30,000 switching cost

A 1% cut gives a large saving. A 0.25% cut saves much less and may not be worth the effort. Use the Home Loan Balance Transfer Calculator for your loan.

Costs to count

• Processing fee at the new lender.
• Legal, valuation and documentation charges.
• Any prepayment charge on the old loan (generally none on floating-rate loans for individuals, but check).

When it makes sense

1. The rate difference is at least about 0.5%.
2. You have many years left. Savings shrink as the loan ages.
3. Your credit score is good enough to get the lower rate.

Try this first

Ask your current lender to match the new offer. Many will lower your rate for a small fee. Also see how to reduce your home loan EMI and interest.