When does balance transfer pay off?
Three things need to align for it to be worth the paperwork:
- Rate gap of ≥ 0.5–0.75% — anything smaller usually gets eaten by processing/legal fees.
- Sufficient tenure left — most savings come from interest you'd otherwise pay; if only 1–2 years remain, the gain is tiny.
- Reasonable fees — processing fee, MOD/CERSAI charges, stamp duty for fresh registration. Add them all to the comparison.
The three modes explained
- Keep existing EMI — at the lower rate, the same EMI clears the loan faster. Maximises interest saved.
- Keep existing tenure — same end date, smaller EMI. Good for monthly cash-flow relief.
- Choose new tenure — set whatever new term you like. Shorter saves the most interest; longer reduces EMI further.
FAQ
What's the break-even point?
Months to recover the processing fee from the EMI saving. Shown below the comparison; if it's much shorter than your remaining tenure, transferring is worth it.
Can I balance-transfer mid-tenure?
Yes for home loans (no prepayment penalty on floating-rate loans per RBI). For fixed-rate or unsecured loans, foreclosure charges apply — add them to the processing fee field.