When to balance-transfer your Bangalore home loan

Balance transfer (BT) is when you move your existing home loan from one lender to another for a better rate.

When BT makes sense

1. Spread between current rate and best available offer ≥ 75 bps
2. You're in the first 7 years of your loan tenure (interest-heavy phase)
3. The new lender is genuinely Tier-1 (don't BT to a worse lender for 25 bps)
4. The processing fee + legal fee + valuation fee total ≤ 6 months of EMI savings
5. You're not planning to sell the property in the next 18 months

How to actually do it

1. Get 3 written BT quotes from competing lenders
2. Confirm the spread, not the headline rate
3. Verify there's no prepayment penalty on your existing loan
4. Time the BT for the start of a financial year if possible, cleaner tax accounting

Common mistakes

• Doing BT in the last 5 years of the loan (interest savings are minimal)
• Not negotiating the processing fee (often waivable for HNI customers)
• Forgetting to update Section 24 interest claim with the new lender's interest certificate