Home loan balance transfer: 3 smart reasons why you should switch today

New Delhi: The Reserve Bank of India has revised the repo rate three times in 2025. The latest revision was made on 6th of June, and currently, RBI’s repo rate stands at 5.50%. This steady fall in lending rates has encouraged many home loan borrowers to reconsider their existing loan terms. If your home loan rate remains high despite market changes, you may now have a real chance to reduce your repayment burden.

One way to do this is through a home loan balance transfer. This option allows you to shift your home loan from your current lender to another offering better terms. Lower interest rates, flexible repayment options, and better customer service are just a few reasons borrowers explore this option. However, before you proceed, it helps to calculate the potential savings and check the new lender’s home loan eligibility calculator to see if you qualify. Estimating your savings can help you assess whether switching your loan will offer meaningful financial benefits in your situation.

What is the meaning of home loan balance transfer?

A home loan balance transfer facility allows you to move your outstanding home loan from one lender to another. Most borrowers consider this move to secure a lower home loan interest rate or improved repayment flexibility. The idea is simple: the new lender clears your outstanding loan balance with your existing lender, and you begin making EMIs to the new lender under new terms.

The primary goal of a home loan balance transfer is to bring down your total interest payments. However, borrowers may also benefit from other features when switching. Many lenders offer options to modify the loan tenure, extend top-up loans, or simply provide better service standards. Before you take the next step, it helps to check your eligibility through a home loan eligibility calculator.

You should also use a home loan balance transfer calculator tool to see possible changes in EMIs, tenure adjustments, and estimate total savings based on your new lender's terms.

Three reasons why you should consider a home loan transfer

If you have an on-going home loan and are on the fence about the home loan balance transfer process, here are three compelling reasons that will convince you:

1. Lower interest rates can result in real savings

The most common reason borrowers explore a home loan balance transfer is to cut down interest payments. Even a slight reduction in the home loan rate of interest can make a difference that adds up across the full repayment period. When you calculate the total interest saved over the remaining years, the number can be quite significant.

For example, imagine you have an unpaid balance of Rs. 45 lakh. If you switch from an interest rate of 9.5 percent to 8.5 percent, you may end up saving several lakh rupees over time. Your monthly EMI will also reduce, giving you more breathing room in your monthly budget. That extra room can help cover other family expenses or be diverted into investments, depending on your financial priorities.

Before finalising the switch, you should definitely use a home loan eligibility calculator to test various scenarios. This tool helps you quickly see how your EMIs might change under different tenure and rate options, and also see how the balance transfer fits into your monthly budget. 

2. Flexible repayment terms and additional borrowing

While interest savings often attract attention first, repayment flexibility plays a key role too. Many lenders allow you to adjust your repayment tenure while transferring your home loan. Some lenders allow you to restructure the remaining tenure while transferring your loan. You may prefer a longer tenure to reduce your EMI or a shorter one if you wish to finish the loan faster.

In many cases, lenders offer top-up loans along with the balance transfer. This additional amount comes at the home loan interest rate, which is generally much lower than unsecured loans such as personal loans or credit card borrowing. Borrowers often use these funds for home renovations, medical treatments, or education expenses. Since your property serves as collateral, lenders are usually willing to extend this facility depending on your repayment track record.

To estimate how much you qualify for, you can enter your details into a home loan eligibility calculator. It allows you to check how much additional loan you may be offered based on your income, outstanding loan balance, and the current property value.

3. Enhanced customer experience

While the financial benefits are important, many borrowers also consider a home loan balance transfer due to service issues with their current lender. Delays in responses, limited online services, or confusing communication can make managing your loan more stressful than necessary.

Switching to a lender that offers better digital platforms, clearer account management tools, and responsive customer support can greatly improve your experience throughout the loan tenure. Having the ability to track EMIs, access loan statements, and make part-payments directly online reduces both effort and time spent managing your loan. Use a home loan eligibility calculator to run this analysis. If the savings are marginal after all costs are included, it may not be worth switching.

Summing it up

With the recent reduction in repo rates and growing competition among lenders, 2025 presents a favourable opportunity for many home loan borrowers to explore a home loan balance transfer. If your current home loan rate of interest remains high, transferring your loan to a lender offering better terms may help you save on interest, lower your EMIs, and even improve your customer experience.

However, before proceeding, it is important to review your full financial situation. Tools like the home loan balance transfer calculator can give you a realistic picture of your potential savings and new EMIs. A well-timed home loan balance transfer can ease your financial burden and help you manage your repayments more comfortably for the remainder of your loan tenure.