Reviewed by CA Jitendraa Rathi (ICAI 217936). Illustrative savings only — Key Facts Statement decides. Sources.
Worked example (indicative): ₹5 crore outstanding with 10 years left, moving from 12% to 10.25%, lowers the EMI from about ₹7,17,355 to about ₹6,67,695, which is ₹49,660 a month. Over 120 months that is about ₹59.6 lakh of interest saved. Switching costs of about ₹4.5 lakh (0.5% fee plus ₹2 lakh other costs) are recovered in month 10, leaving a net saving of about ₹55.1 lakh.
Defaults are placeholders for calculation, not quotes. The saving assumes the same tenure and a rate that stays unchanged; floating rates reset.
The bank decides. Calculator results are indicative only and do not guarantee approval, amount, rate or tenure.
How does the calculator work?
A balance transfer means a new bank pays off your old loan and you repay the new bank at a lower rate.
- EMI = P × r × (1 + r)n ÷ ((1 + r)n − 1), where P is the amount still owed, r the monthly rate and n the months left. Worked out at the old rate and the new rate.
- Monthly saving = old EMI − new EMI. Interest saved = monthly saving × months left.
- Switching cost = loan × processing fee % + other costs.
- Net saving = interest saved − switching cost. Break-even = switching cost ÷ monthly saving, rounded up to a month.
Worked example
You owe ₹5 crore with 10 years (120 EMIs) left at 10.5%. A new bank offers 9.5%, with a 0.5% processing fee and ₹50,000 of other costs.
- Old EMI = ₹6,74,675. New EMI = ₹6,46,988. Monthly saving = ₹27,687.
- Interest saved = ₹27,687 × 120 = ₹33,22,464.
- Switching cost = ₹5 crore × 0.5% + ₹50,000 = ₹3,00,000.
- Net saving = ₹30,22,464. Break-even = ₹3,00,000 ÷ ₹27,687 = 11 months.
How should you read the result?
- Break-even month — months until switching costs are recovered from EMI savings. Near the end of tenure → often not worth switching.
- Net saving — gross interest saved minus processing fee, legal, valuation, stamp and any foreclosure charge.
- Reprice first — if net saving is thin or negative, ask your current lender to match before you transfer.
- Fresh appraisal — a BT is a new credit check (income, title, valuation); plan the same documents as a new LAP.
Illustrative savings only. Compare the full Key Facts Statement (RBI KFS, checked 28 Oct 2026). The new lender decides.
Written and reviewed by CA Jitendraa Rathi, Chartered Accountant (CA membership number 217936) · Ex-banker, 20 years of experience in credit and lending · LinkedInLast reviewed · Expert review: CA Jitendraa Rathi (ICAI 217936)
Frequently asked questions
When does a LAP balance transfer save money?
When the interest saved over the remaining tenure is more than the cost of switching: the new lender’s processing fee, legal and valuation charges, stamp duty on the new mortgage and any foreclosure charge. This calculator shows that net figure and the months it takes to recover the switching cost.
Is the saving shown here guaranteed?
No. It is indicative. The real saving depends on the rate the new lender actually sanctions, its reset terms, fees in the Key Facts Statement and whether you keep the same tenure.
Do I pay a foreclosure charge on a floating-rate LAP?
RBI rules bar foreclosure charges on floating-rate term loans to individuals for non-business purposes. Business-purpose loans and fixed-rate loans can carry one, so check your existing sanction letter and add any charge in "Other switching costs".