Home loans

Home loan balance transfer: when does switching banks save money?

Updated October 2026 · 5 min read

Moving a ₹40 lakh home loan with 17 years left from 9.5% to 8.5% saves about ₹5 lakh in interest. The switch costs around ₹34,000 in fees, which you earn back in about 14 months through the lower EMI.

The example

You still owe ₹40 lakh and have 17 years (204 EMIs) left. Your bank charges 9.5%, while another bank offers 8.5%.

What switching costs

• Processing fee at the new bank: often around 0.5% of the loan, plus 18% GST. On ₹40 lakh, that's about ₹23,600.
• Legal and valuation charges: roughly ₹5,000 to ₹15,000.
• Stamp duty on the new mortgage in some states.

Floating-rate home loans for individuals carry no foreclosure charge, so your current bank can't charge you for leaving.

With about ₹33,600 in total costs and an EMI that's ₹2,460 lower, you break even in about 14 months.

Keep the old EMI and finish sooner

If you keep paying ₹39,591 a month after switching, the loan closes in 179 months instead of 204. That's about 2 years earlier, and the interest saving grows further.

When switching is worth it

• The rate gap is at least 0.5%. At only 0.5% (9.5% to 9%), the saving drops to about ₹2.5 lakh.
• At least 8 to 10 years are left. Most interest is paid in the early years, so late switches save less.
• Your credit score is good. The advertised rate goes to strong applicants.

Try your own bank first

Many banks will cut your rate if you ask, for a small conversion fee, often a few thousand rupees. Show them the competing offer. If they match it, you save almost as much without any paperwork.