It’s only natural that you’re always looking for a better home loan than the one you now have. Even if you’ve already taken out a loan, it’s only natural to stay up with the latest advances and industry trends. You will want improved terms on your loan as soon as you find a better one. Home loan refinancing is the possible option to do this.
Home loan refinance
A refinance of home loans is when you get a new loan from a different lender to pay off an old one. The two main reasons for switching a housing loan are to acquire a lower interest rate and to receive a top-up on the initial loan amount. Apart from these two, there could be a variety of other reasons for refinancing.
Common reasons for home loan refinance
Saving on interest cost
The most typical reason for switching a home loan to a new lender is because of this. If a person is paying a higher interest rate on an existing home loan than another lender, he may be enticed to take out a new loan with a lower total interest rate. As a result, he get a lower EMI.
Moving from floating rate loans to fixed rate loans or vice versa
Customers with home loans could fall into one of two categories. They may be paying a high floating interest rate and would benefit from switching to a fixed rate home loan. Here their EMI will be fixed for a certain period of time. Alternatively, they could be locked into a higher-interest home loan. Fixed rate loans typically are at a higher rate than floating rate loans at any point of time. In this situation, they may discover that general interest rates have fallen, and floating rate loans are far less expensive than their current loan. Then making switching the loan worthwhile. In each of these cases, refinancing might be a good option.
Additional loan opportunity
Customers can take incremental funding or top-up at the current home loan rates in addition to refinancing their home loan in India. You should only acquire a loan top-up from another lender if you are getting a better rate. Otherwise, attempt to get it from your current lender because it will be easier and you won’t have to pay any fees.
Getting better service
Together with the above-mentioned factors there are other convincing case for refinancing. This include digitized account administration, on-tap customer assistance, branch proximity, and decreased account management costs. If your housing loan was secured from a bank that does not adequately service you you have every reason to refinance your loan with a lender who is known for providing excellent service. For example, if it fails to issue loan statements on time, provides poor customer service, or is slow to react to interest rate changes.
Change in financial status
Any change in your income will have an impact on your ability to pay your EMIs. If your monthly income has decreased for whatever reason or if you have another financial commitment, refinancing your home loan and replacing it with one with a longer term is an excellent way to lower your EMI.
How is home loan refinance is done
The most straightforward way to refinance is to have your new lender pay off your existing lender’s debts. Then take over the remaining loan balance. Once you’ve chosen a lender with better terms and conditions, you may complete the necessary paperwork and other procedures. They’ll pay off the former lender and take over the outstanding loan balance. The new lender would then receive your EMI payments.