Balance transfer calculator: methodology

Calculation

Current EMI  = EMI(outstanding, current rate, remaining months)
New EMI      = EMI(outstanding, new rate, new tenure)
Switching costs = processing fee + GST on it + legal & valuation
                  + stamp duty + foreclosure charge + other
Stay total   = current EMI × remaining months
Switch total = new EMI × new tenure + switching costs
Net saving   = stay total − switch total

A negative net saving means switching costs you more than staying.

GST is part of the switching costs only on fees and charges, such as the processing fee. The interest on the new loan, like the interest on the old one, is exempt from GST. CBIC Circular No. 102/21/2019-GST (paragraph 6) clarifies that fees and charges on a loan aren't exempt interest; the rate for financial services is 18% (Notification No. 11/2017-Central Tax (Rate), heading 9971: 9% central tax plus 9% state tax).

Break-even month

The first month in which the running total of (current EMI − new EMI) is at least the switching costs. If that never happens within the loan term, we show "No break-even within the loan term". If there are no switching costs, there is nothing to recover.

Different tenures

If the new tenure is different from your remaining tenure, we show a warning. A longer tenure lowers the EMI but usually increases total interest, so comparing EMIs alone can mislead.

Limitations

• Assumes both rates stay fixed.
• The whole outstanding balance moves; top-up loans are not included.
• All switching costs are paid at the time of transfer.
• Amounts are nominal rupees, not discounted.