Balance transfer: should you switch your home loan?

TL;DR

Balance transfer = refinance your existing loan to a new lender at a lower rate.
Break-even: if the rate delta ≥ 0.5% AND remaining tenor ≥ 5 years, BT is usually worth it.
Cost: processing fee 0.25-1% at new lender + registration of fresh mortgage (1% of loan) + legal + valuation.
Don’t BT if your existing loan has significant prepayment penalties or a fixed period still running.

How the math works

Your interest savings from a lower rate compound over remaining tenor. BT costs are front-loaded — you pay them at transfer. Rule of thumb: (rate delta × average outstanding principal × remaining tenor) should be at least 3x BT cost. Anything less isn’t worth the admin friction.

When BT definitely works

You took your loan in a high-rate period (2022-23). Rates have softened since. You have 10+ years remaining. No prepayment penalty (floating-rate loan). New lender offers at least 50 bps lower. This scenario should trigger a BT conversation annually.

When BT doesn’t work

Remaining tenor under 3 years. Rate delta under 30 bps. Existing loan is in a fixed period with exit penalty. Your credit score has dropped since origination (new lender may charge higher). BT friction (paperwork, re-registration of mortgage) is non-trivial — only do it when the math is clearly favourable.

FAQs

Do I need to re-register the mortgage during BT?

Yes — the new lender files a fresh mortgage and the old one is released. This incurs 1% stamp duty on the loan amount. Factor it into your BT cost calculation.

Can I BT just a portion of my loan?

Typically no — BT transfers the entire outstanding. You can combine BT with a top-up loan at the new lender for renovation or other expenses.

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