Balance Transfer Calculator

What a home loan balance transfer is

A balance transfer moves the outstanding balance of your home loan from your current lender to a new one, usually to get a lower interest rate. The new lender pays off what you owe, your old loan closes, and you carry on repaying the same debt to a different bank at different terms. Your property, your tenure and your outstanding amount stay the same - only the rate, the lender and the paperwork change.

It is sometimes called a home loan takeover or refinancing. In India it is common because loans run for twenty to thirty years while rates move constantly, so a loan sanctioned five years ago can easily sit well above what the same borrower would be offered today.

Talk to your own bank first

Before comparing other lenders, ask your existing one what they would charge you today. Most banks will convert an existing loan to their current card rate for a conversion fee, typically a small percentage of the outstanding amount. That avoids re-registering the mortgage, a fresh processing fee, new legal and valuation charges, and several weeks of paperwork.

A conversion at a slightly worse rate often beats a transfer at a better one, simply because it costs so much less to do. It is worth asking before you start an application elsewhere.

When a transfer is worth it

A lower rate is not the same as a saving. What decides it is whether the interest you avoid over the remaining tenure is larger than what the move costs you up front - and how long it takes to get that cost back.

• How much is left to pay. Interest is charged on the outstanding balance, so the same rate cut saves far more on a large balance than a small one.
• How long is left. A rate cut early in a loan has two decades to compound. In the last few years there is little interest left to save, and the fees stay the same.
• The break-even point. Divide the total switching cost by the monthly saving. If you would not still be holding the loan by then, the move loses money.

The calculator above works all three out for you. Enter what you owe, your current rate, what is left of the tenure, and the rate you are being offered.

What a transfer costs

• Processing fee at the new lender, usually a percentage of the loan and often capped. This is normally the largest single cost.
• Pre-closure charges at your existing lender. On a floating rate home loan these are nil under RBI rules, and that applies to NBFCs as well as banks. On a fixed rate loan your lender sets the charge, so ask them for the figure.
• MOD charges, where a Memorandum of Deposit of Title Deeds applies. The existing one is cancelled and a new one registered, and the amounts vary by state and by sub-registrar office - which is why no calculator can quote them. Ask the office where your property is registered.
• Legal, valuation and document retrieval charges, which vary by lender.

Common questions

Does a balance transfer hurt my credit score?

A new lender will run a credit check, which is recorded. Closing the old loan and opening a new one also changes the age of your accounts. Both effects are usually small, and paying the new loan on time matters far more.

Can I transfer and borrow more at the same time?

Many lenders offer a top-up alongside a takeover, subject to the value of the property and your eligibility. The top-up is usually priced higher than the home loan portion, so it is worth asking for both rates separately.

How long does it take?

Commonly two to four weeks, depending on how quickly your existing lender releases the property documents and how busy the sub-registrar is. You keep paying your existing EMI until the loan is actually closed.

Will my EMI or my tenure change?

That is your choice at the new lender. Keeping the tenure and lowering the EMI frees up monthly cash; keeping the EMI and shortening the tenure saves considerably more interest overall. The calculator above holds the tenure constant and shows the EMI falling.

What documents will the new lender ask for?

Generally identity and address proof, income proof, your existing loan statement and outstanding balance letter, and the property documents held by your current lender. The new lender collects those directly from them as part of the takeover.