Benefits of Refinancing
Jul 25, 2016 Home Loan
There are a lot of people who use the method of refinancing. In this, a person avails a new loan from a different lender or institution to pay off one of the existing loans. Refinancing yields a person majorly two benefits, one is that the person get an advantages of a lower interest rate and second to get a top-up in the existing loan. There can be other reasons also which can let to refinancing such as poor service by the current lender or institution and so on.
Let us have a look at the benefits that refinancing a home loan provides-
# A SAVE ON INTEREST COST
this is one chief reason why people go refinancing. A person who is currently paying a high rate of interest would definitely be tempted by any other lender who us offering him a lower rate of interest. The scenario of a reducing rate of interest is what leads to people opting for a refinancing loan.
#SWITCHING RATE OF INTEREST
there can be two cases that a costumer may be, the first being he or she pays a high floating rate and hence wants to switch to a fixed rate wherein the EMI will remain constant for a particular period of time. The other situation being where a costumer is paying high fixed rate and watch to turn to a floating rate of interest. In both the cases, a costumer would prefer opting for a loan refinancing. There will be charges that a person might incur while getting another loan refinanced for closing his current one but they will be less when compared to the saving he will be able to make.
# ADDITIONAL LOAN
with loan refinancing, customers tend to have an option of opting for a top-up at the existing home loan. Let’s take for instance that Ram took a loan of Rs 50 lakhs for purchasing a house of Rs 60 lakhs around 6 years ago. Having paid EMI for 6 years, the loan value now has come down to 20lakhs. Also, the prevailing rate of the property now is Rs 1 crore 20 lakhs. This applies that Ram can now avail a home loan up to the amount of 1 crore on this house, though he cannot avail the whole amount as he still has an outstanding loan. In such a scenario Ram can get a loan refinanced from a different lender for transferring the amount of Rs 20 lakhs at a low-interest rate wherein he can also avail a funding of Rs 80 lakhs (Rs 1crore- Rs 20 lakhs).
# POOR SERVICE
In case the bank from which you have availed a loan does not give you a satisfactory service, let say they provide bad costumer care services or do not issue statements of a loan on time then a person can get a loan refinanced from another lender who has a great service quality.
#FINANCIAL STATUS
any change in you income would affect your ability to pay your EMIs. If you income has decreased than one can opt for refinancing by replaying the existing home loan with longer tenure one which will help reduce your EMI.
Let us have a look at the benefits that refinancing a home loan provides-
# A SAVE ON INTEREST COST
this is one chief reason why people go refinancing. A person who is currently paying a high rate of interest would definitely be tempted by any other lender who us offering him a lower rate of interest. The scenario of a reducing rate of interest is what leads to people opting for a refinancing loan.
#SWITCHING RATE OF INTEREST
there can be two cases that a costumer may be, the first being he or she pays a high floating rate and hence wants to switch to a fixed rate wherein the EMI will remain constant for a particular period of time. The other situation being where a costumer is paying high fixed rate and watch to turn to a floating rate of interest. In both the cases, a costumer would prefer opting for a loan refinancing. There will be charges that a person might incur while getting another loan refinanced for closing his current one but they will be less when compared to the saving he will be able to make.
# ADDITIONAL LOAN
with loan refinancing, customers tend to have an option of opting for a top-up at the existing home loan. Let’s take for instance that Ram took a loan of Rs 50 lakhs for purchasing a house of Rs 60 lakhs around 6 years ago. Having paid EMI for 6 years, the loan value now has come down to 20lakhs. Also, the prevailing rate of the property now is Rs 1 crore 20 lakhs. This applies that Ram can now avail a home loan up to the amount of 1 crore on this house, though he cannot avail the whole amount as he still has an outstanding loan. In such a scenario Ram can get a loan refinanced from a different lender for transferring the amount of Rs 20 lakhs at a low-interest rate wherein he can also avail a funding of Rs 80 lakhs (Rs 1crore- Rs 20 lakhs).
# POOR SERVICE
In case the bank from which you have availed a loan does not give you a satisfactory service, let say they provide bad costumer care services or do not issue statements of a loan on time then a person can get a loan refinanced from another lender who has a great service quality.
#FINANCIAL STATUS
any change in you income would affect your ability to pay your EMIs. If you income has decreased than one can opt for refinancing by replaying the existing home loan with longer tenure one which will help reduce your EMI.
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