Here is How Home Loan Refinancing is Working Wonders for Many!

For those who are unfamiliar with the concept of home loan refinancing, it is when an existing home loan plan is transferred to a new lender. The reason for this transfer is because the new lender is offering better benefits, such as a more affordable interest rate and/or a top-up on the original loan amount.

Home loan interest rates have also reached new lows in 2021. For example, at the beginning of September 2019, the lowest loan rates were around 8.40%. However, as of July 2021, it has been possible to find a lender offering a loan interest rate in the range of 6.49-6.95%. These falling rates present borrowers with a great opportunity to save money in times during the pandemic by refinancing their housing loans.

4 benefits of refinancing a home loan

• Save on the interest cost

The most common reason for transferring a housing loan is to get a better home loan balance transfer interest rate. With the loan interest rates decreasing, it is quite possible to find a new lender offering a lower interest rate as compared to the existing home loan rate. This is when it would make sense to transfer your loan to the new lender as it could result in significant savings.

• Get a top-up loan

Now, a home loan balance transfer is not just useful when it comes to interest rates. Many borrowers also apply for such a transfer in case the new lender is offering them an option of taking a top-up loan. However, it is advisable to opt for the top-up loan only if the new lender is offering it at a lower interest rate. If you are going for a home loan transfer only because of the top-up loan, check with the existing lender regarding a top-up loan and its interest rate. Make the shift only if the new lender is offering better terms as compared to the existing one.

• Gain access to better service

If the service provided by the current lender is not satisfactory, you can exercise the option of a loan transfer. For example, if the current lender does not provide loan statements on time or offers bad customer service, you can refinance your loan to a new lender that is providing good service.

• Lower the home loan EMIs

It is quite possible that the current EMI structure of the housing loan is causing financial difficulties. In such a situation, the option of the loan refinancing can make life much easier. The new lender could offer you a longer loan tenure for the home loan. This would make your repayment considerably easier as your EMIs would be of a smaller amount. Also, do not forget to use a home loan balance transfer EMI calculator to make sure your next repayment plan is a suitable one.

Now, refinancing a home loan involves paperwork and certain charges such as processing fees. Make sure to inquire about the documents required for home loan balance transfer and calculate the charges of this transfer to ease the entire process.