When does a home loan balance transfer make sense?

If your home loan rate is noticeably higher than what new borrowers are getting, moving the loan to another lender can cut your EMI or tenure. But a transfer is not free, so do the arithmetic first.

The rule of thumb

A transfer usually makes sense when the rate difference is at least 0.50%, the outstanding amount is large and you still have many years left to pay. Early in a loan most of your EMI is interest, so that is when a lower rate helps most.

Costs to add up

• New lender's processing fee
• Legal and technical (valuation) charges
• Stamp duty / mortgage (MOD) charges in your state
• Any insurance the new lender bundles

Ask your current lender first

Many banks will reduce your rate for a small conversion fee if you ask. If they refuse or the new rate is still higher than the market, a transfer is the stronger option.

Top-up loans

Lenders often offer a top-up along with the transfer at close to home loan rates, which is far cheaper than a personal loan for renovation or other needs.

Share your outstanding amount, rate and remaining tenure with us, and we will show you the saving after costs.