The 50-bps rule, the break-even period, and the top-up trap.
A balance transfer makes sense when the new rate is at least 50 basis points lower than your existing one and you have more than 5 years of tenure remaining.
Calculate your break-even: total switching cost (processing fee + legal + stamp duty) divided by monthly EMI savings. If it's under 18 months, transfer makes sense.
Beware the top-up trap: many lenders sweeten transfers with a top-up loan at home-loan rates. It's cheap money, but stretching your tenure to repay it can wipe out the savings from the transfer itself.
