By Anitha Rajan ·
Balance-transfer marketing leads with the rate difference. The real question is net savings after costs, over the tenure you will actually keep the loan.
Number one: remaining tenure. Interest is front-loaded, so a transfer in year 2 of 20 saves dramatically more than one in year 12. Number two: all-in switching cost — processing fee, legal and valuation charges, stamp duty on the new mortgage where applicable.
Number three: the spread, not the headline rate. Floating loans reprice off a benchmark; a lender quoting 8.4% with a fat spread can cost more within two resets than your current 8.6%.
Number four: top-up pricing, if you are borrowing extra during the move — some lenders price top-ups near LAP rates. Number five: your prepayment plan; if you intend to close within three years, most transfers never break even.
Our desk runs this arithmetic free of charge and, in about a third of cases, gets your existing lender to reprice instead — the cheapest transfer is the one you never make.