By Anjaneyulu Yadav · 15 Nov 2026 · Balance transfer
If you took your home loan a few years ago, there is a good chance you are paying more than what new borrowers get today. Moving the loan to another bank at a lower rate is called a balance transfer, and you can usually take extra money on top of it — a top-up — at close to home loan rates.
It sounds like an easy decision. It is not always one. Here is how we look at it with customers.
Three things decide whether you save
- The rate gap. As a rough guide, a difference of 0.5% or more is worth examining. Smaller gaps are often eaten up by costs.
- The years left. Interest is heaviest in the early years. A transfer in year 3 of a 20-year loan saves far more than one in year 15.
- The cost of moving. The new bank charges a processing fee, and there are legal, valuation and mortgage registration (MODT) charges. Add them up before you decide.
A simple example
Take an outstanding loan of ₹40 lakh with 15 years left. At 9.25% the EMI is about ₹41,170. At 8.25% it comes to about ₹38,800. That is about ₹2,360 less every month, or roughly ₹4.25 lakh over the remaining term, before costs. If moving costs you ₹40,000, you recover it in under a year and a half. You can try your own numbers in our balance transfer calculator.
First, ask your own bank
Many banks will reduce your rate for a small conversion fee when you ask, especially when you show a written offer from another lender. If they match the rate, you save without changing banks. For floating-rate home loans taken by individuals, RBI rules do not allow a foreclosure penalty, so your current bank cannot charge you for leaving.
When the top-up helps
A top-up is useful when you need funds for renovation, education or closing costly personal loans and credit card dues. It is much cheaper than a personal loan. It is also still a loan against your home, so borrow only what you need.
Documents you will need
Besides your KYC and income papers, the new bank will ask for the sanction letter, a loan statement, and the list of documents (LOD) held by your present bank. If you send us your loan statement, we will work out the exact saving and tell you plainly whether shifting is worth it.
Common questions
Is there a penalty for shifting my home loan?
For floating-rate home loans taken by individuals, banks and housing finance companies are not allowed to charge a foreclosure or prepayment penalty.
How long does a balance transfer take?
Usually two to four weeks, depending on how quickly your current bank issues the list of documents and the foreclosure letter.
Related service: see full details, documents and eligibility →
Keep reading
- Home Loan Without ITR: What Are Your Real Options?
- Check Your Home Loan Eligibility Before You Apply Anywhere
Anjaneyulu.in is a loan consultancy, not a lender. Rates, eligibility and sanction are decided by the bank or NBFC.