Loan Balance Transfer Calculator
Loan Balance Transfer Calculator
Should you move your home loan to a lender with a lower rate? Compare the EMI and the interest on the outstanding balance at both rates, net of the cost of switching, and see when that cost is earned back.
Balance transfer saving
$30,00,000 outstanding with 15 years left at 9.5%, moving to 8.5% with a 0.5% fee and $10,000 of other costs
Saving from a balance transfer
- EMI
- B × r ÷ [1 − (1 + r)−n] at each lender’s monthly rate r = annual rate ÷ 1200
- B
- the outstanding balance, which the new lender pays off
- n
- the remaining months, the same on both loans
- f, C
- the processing fee as a share of the loan, and the other one-off costs. “In today’s money” discounts each month’s EMI saving by inflation, then takes off the costs.
Worked example
$30,00,000 outstanding with 15 years left at 9.5%, moving to 8.5% with a 0.5% fee and $10,000 of other costs
Current EMI at 9.5% over 180 months: $31,327
New EMI at 8.5% over 180 months: $29,542; saving $1,785 a month
Interest saved: the EMI saving × 180 = $3,21,220
Costs: 0.5% of 30,00,000 + 10,000 = $25,000; earned back by EMI number 15
Net saving: 3,21,220 − 25,000 = $2,96,220; in today's money at 4% inflation, $2,17,431
The same switch in three situations
| Situation | EMI saved a month | Interest saved | Costs | Net saving | Costs back by EMI |
|---|---|---|---|---|---|
| 30 lakh, 15 years left, 9.5% → 8.5% | $1,785 | $3,21,220 | $25,000 | $2,96,220 | 15 |
| 30 lakh, 15 years left, 9.5% → 9.25% | $451 | $81,175 | $25,000 | $56,175 | 56 |
| 15 lakh, 3 years left, 9.5% → 8.5%, 1% fee + 15,000 | $698 | $25,132 | $30,000 | −$4,868 | Not within the tenure |
When a balance transfer pays
A balance transfer moves the outstanding balance of a loan to a new lender at a lower rate: the new lender pays off the old one and you repay the new loan. Keep the remaining tenure the same and the EMI falls; because both loans repay the same principal over the same months, the interest you save is simply the EMI saving multiplied by the months left. In the example, about $1,785 a month for 180 months is $3,21,220. Against it go the costs of switching — the new lender’s processing fee, legal and valuation charges, and stamp duty on the new mortgage where your state charges it — $25,000 here, earned back by EMI number 15.
Three things decide the answer: the gap between the rates, the balance, and the time left. Early in a loan most of each EMI is interest, so a lower rate saves the most then; late in the loan there is little interest left to save, and fixed costs can swallow it. The table shows how quickly a small rate cut or a short remaining tenure shrinks the benefit. To see your balance at any point, use the loan amortization calculator.
What the old lender can charge. In India, the Reserve Bank’s circular of 7 May 2014 stopped banks charging foreclosure charges or prepayment penalties on floating-rate term loans to individual borrowers. Its Pre-payment Charges on Loans Directions, 2025 extend that to every regulated lender for floating-rate loans to individuals for non-business purposes sanctioned or renewed from 1 January 2026, whatever the source of the money — which includes a new lender’s funds — and with no lock-in. A fixed-rate loan, a business loan, or a loan outside India can carry a charge; check the loan agreement or Key Facts Statement and add it to the other costs. None of this covers the new lender’s own fees.
Before switching, ask your current lender to reprice the loan: many will lower the rate for a fee, without new paperwork. Check the new lender’s rate benchmark and spread, since a floating rate will be reset over time, and what happens to any insurance bundled with the old loan. If you would rather keep the EMI and finish sooner, the loan tenure calculator shows how many months the new rate saves. The saving here is undiscounted; the today’s-money line discounts each month’s saving by inflation. This is arithmetic on the figures you enter, not financial advice.
Frequently asked questions
Is a home loan balance transfer worth it?
When the rate gap, balance and remaining tenure are large enough to outweigh the costs. Moving $30,00,000 with 15 years left from 9.5% to 8.5% saves $3,21,220 in interest, or $2,96,220 after $25,000 of costs.
Can my bank charge me for moving my home loan?
In India, not on a floating-rate loan to an individual: RBI barred foreclosure charges on those in 2014 for banks, and its 2025 Directions bar pre-payment charges by all regulated lenders on floating-rate loans to individuals for non-business purposes sanctioned or renewed from 1 January 2026. Fixed-rate and business loans may carry a charge.
How long does it take to recover the switching costs?
Divide the costs by the monthly EMI saving. In the example, 25,000 ÷ 1,785 rounds up to EMI number 15.
Should I keep the EMI and cut the tenure instead?
That saves more interest but keeps the monthly outgo the same. This page compares like for like with the same tenure; the loan tenure calculator shows the shorter term.
Related calculators
References
- Reserve Bank of India. Levy of foreclosure charges/pre-payment penalty on floating rate term loans. RBI/2013-14/582, DBOD.Dir.BC.No.110/13.03.00/2013-14, 7 May 2014.
- Reserve Bank of India. Reserve Bank of India (Pre-payment Charges on Loans) Directions, 2025. Issued 2 July 2025; applies to loans sanctioned or renewed on or after 1 January 2026. No pre-payment charges on floating-rate loans to individuals for non-business purposes, irrespective of the source of funds and with no minimum lock-in; any charge that is allowed must be disclosed in the sanction letter and KFS.
- Reserve Bank of India. Key Facts Statement (KFS) for Loans & Advances. RBI/2024-25/18, DOR.STR.REC.13/13.03.00/2024-25, 15 April 2024: lenders must give a KFS with the annual percentage rate, all charges and the repayment schedule for retail and MSME term loans.
- Brealey RA, Myers SC, Allen F. Principles of Corporate Finance. McGraw-Hill. The present value of an annuity, from which the level-payment loan formula, its schedule and its inverse follow.
- Central-bank inflation targets used as default inflation by currency: Reserve Bank of India (4% CPI, flexible inflation targeting framework); U.S. Federal Reserve (2% PCE); European Central Bank (2%); Bank of England (2% CPI); Bank of Canada (2%); Reserve Bank of Australia (2–3%); Bangko Sentral ng Pilipinas (3% ± 1). Actual inflation often runs above target.