Loan Balance Transfer Calculator
A balance transfer moves your outstanding loan to another lender at a lower interest rate. Enter both rates and the charges to see whether the switch really saves money.
Results
Net saving over the loan
₹3,47,256
- Monthly EMI saving
- ₹2,081.98
- Current EMI
- ₹36,547.86
- New EMI
- ₹34,465.88
- One-time costs
- ₹27,500
- Interest left on current loan
- ₹30,78,616
- Interest on new loan
- ₹27,03,859
- Break-even period
- 1 year, 2 months
- Time to recover the fees
Switching to 8.5% over 15 years saves about ₹3,47,256.29 overall after ₹27,500.00 of fees.
Show the calculation steps
- Current EMI on ₹35,00,000.00 at 9.5% for 180 months = ₹36,547.86; total payable ₹65,78,615.50.
- New EMI at 8.5% for 180 months = ₹34,465.88; total payable ₹62,03,859.21.
- One-time cost = processing fee + other fees = ₹27,500.00.
- Net saving = current total − (new total + fees) = ₹65,78,615.50 − (₹62,03,859.21 + ₹27,500.00) = ₹3,47,256.29.
- Break-even = fees ÷ monthly saving = ₹27,500.00 ÷ ₹2,081.98 ≈ 14 months.
- If the new tenure is longer than the remaining tenure, the EMI falls but total interest can still rise; compare the net saving, not just the EMI.
When a balance transfer makes sense
It works best when the rate drop is meaningful, a lot of the loan remains and the fees are small compared with the interest saved. Near the end of a loan there is little interest left to save.
Count all the costs
Processing fees, legal and valuation charges and any foreclosure fee at your current lender all reduce the saving. The break-even period tells you how long it takes for the lower EMI to pay back those costs.
Formula
EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1)
Net saving = current total payments − (new total payments + one-time costs)
Break-even = one-time costs ÷ monthly EMI saving
Where:
- P
- = Outstanding balance
- r
- = Monthly rate of each loan
- n
- = Months remaining on each loan
Example calculation
₹35 lakh outstanding: 9.5% → 8.5% with 180 months left
Inputs
- Outstanding Loan Balance
- ₹35,00,000
- Current Interest Rate
- 9.5 %
- Remaining Tenure
- 180 months
- New Lender's Rate
- 8.5 %
- New Tenure
- 180 months
- Processing Fee
- 0.5 %
- Other Charges
- ₹10,000
Result
- Net saving over the loan
- ₹3,47,256
- Monthly EMI saving
- ₹2,081.98
- Current EMI
- ₹36,547.86
- New EMI
- ₹34,465.88
- One-time costs
- ₹27,500
- Interest left on current loan
- ₹30,78,616
- Interest on new loan
- ₹27,03,859
- Break-even period
- 1 year, 2 months
Step-by-step
- Current EMI on ₹35,00,000.00 at 9.5% for 180 months = ₹36,547.86; total payable ₹65,78,615.50.
- New EMI at 8.5% for 180 months = ₹34,465.88; total payable ₹62,03,859.21.
- One-time cost = processing fee + other fees = ₹27,500.00.
- Net saving = current total − (new total + fees) = ₹65,78,615.50 − (₹62,03,859.21 + ₹27,500.00) = ₹3,47,256.29.
- Break-even = fees ÷ monthly saving = ₹27,500.00 ÷ ₹2,081.98 ≈ 14 months.
Important notes
- A rule of thumb is that a rate difference of at least 0.5% to 1% is usually needed to justify a transfer.
- Foreclosure charges at the current lender may apply and can be added under other charges.
Disclaimer: This calculator provides estimates for informational purposes and should not be considered financial advice. Actual figures from lenders, banks and investment products can differ because of fees, taxes, rounding rules and changing rates. Consult a qualified professional before making financial decisions.
Frequently asked questions
How do I know if a balance transfer is worth it?
Compare the net saving after all fees and check the break-even period. It is worth it if you will hold the loan longer than the break-even.
What is the break-even period?
The number of months of EMI savings needed to recover the one-time costs of switching.
Does a balance transfer reset my tenure?
You can set the new tenure yourself. Keeping the tenure the same makes the comparison fair.
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