Exactly 2 years ago, Mahesh moved into his new house with the help of a home loan offered by a reputed bank. A certain portion of his income was consumed for repaying the loan. His salary steadily increased, so his expenses. He was desperately looking for a way out to manage his debts and family expenses. In such a dire situation, transferring his existing home loan to another bank for a reduced interest rate seemed to ease off his financial burden. Is his decision to opt for a balance transfer a worthy step? Let us analyse more about how much Mahesh can save by transferring his existing home loan to another bank. 

Understanding Home Loan Balance Transfer 

Home loan balance transfer is the process of transferring your existing home loan to another lender for better services and low interest rates. The details of Mahesh’s outstanding home loan with the existing lender are as follows 

Additional Reading: Is Transferring Your Home Loan a Good Idea?

Outstanding loan amount 

INR 30 Lakhs 

Outstanding tenure 

23 years 

Current interest rate 


Monthly EMI 


Total amount to be paid with interest 

INR 82,55,160 


Mahesh approached the new lender who promised to offer the loan at 8.35%. Mahesh was in for a pleasant surprise as he would be able to enjoy a certain financial freedom with the reduction of EMI amount. As per the new lender’s offer, Mahesh will be paying the following loan amount after the balance transfer.  

Outstanding principle amount 

INR 30 Lakhs 

Outstanding tenure 

23 years 

Current interest rate 


Monthly EMI 


Total amount to be paid with interest 

INR 67,58,412 


Additional Reading: How to do a Home Loan Balance Transfers

It is a good deal to go for as Mahesh could save INR 14,96,748 from the balance transfer.  

Things to Consider Before Applying for the Balance Transfer 

While the home loan balance transfer worked out in favour of Mahesh, the same may not happen for everyone as there are lot of factors to be considered before going for the transfer.  

As Mahesh was in the early stages of repaying his home loan, the transfer proved to be beneficial in terms of interest and EMI payment.  

If a person plans to apply for the transfer after repaying 80% of the loan, it would not be profitable as the new lender may charge up to 5% of the loan amount as processing fee. Calculate the costs involved for the loan transfer, stamp duty and any other hidden charges. 

Home loan balance transfer is as equal to applying for a new home loan all over again. It would be your duty to read all the terms and conditions as they could be tricky which you might find it difficult to deal with later. The new lender might ask you to apply for a new insurance policy or opening a savings account etc. along with the transfer. 

Ensure that the interest rate offered by the new lender is applied throughout the entire tenure. You might find yourself in a sticky situation if the rates are changed later.  

If you are repaying your home loan at base rate, switching it to MCLR rate with the same bank too can get you reduced interest rate which saves a lot of your time and transfer costs.   


Apply for a home loan balance transfer only after calculating the financial costs involved and the amount you can save from the switching the loan.