Home Loan Refinancing: What Is It And Is It A Good Idea?
Apr 10, 2017 Home Loan
Home Loan Refinancing is simply a way to pay your existing home loan by opting for another home loan with a different lender.
A lot of people look for home refinancing half way through the existing loan. The major reason for it is lower interest rates and the top up on the existing loan.
There are also many other reasons for it which might prove beneficial to you.
1.Saving on interests:
This is the most common reason. If the borrower has found another lender who is offering a lower rate of interest, and then he considers choosing home loan refinancing. This ultimately reduces the monthly EMI.
2.Shifting the fixed rates to the floating rates and vice versa:
If your lender is offering a lower rate of interest on floating interest rates or vice versa, you can shift your loan. Fixed interest offers fixed rates of interest till it is repaid. This is not the case with floating EMI, the interest changes over the time, sometimes they are lower sometimes they are high. Choosing wisely between both of them is an important task.
3.Top up loan:
Borrowers can also opt for top up loans apart from home loan refinancing. If the interest rates are low, it is a good idea to apply for the top-up loans. If the rates are similar for top up loans, then it is better to take it from you current lender only rather than opting for a new one. The chances of getting a top up loan are higher if the borrower’s loan repayment history is good.
4.Unhappy with the services from you current lender:
If you are unhappy with the service provided by your current lender, then it is better to move to a new lender. Delays in changes, not providing regular loan statement, these are the red flags and you should move on to the new loan lender.
5.Monthly income:
This is important to consider your monthly income. If your payment has increased and you have the capability to repay your loan quickly by increasing the monthly EMI, it is better to do that. But if the monthly income has reduced, it might be a better option to move your loan to a lender offering lower interest rates.
It is always better to repay your loans before the time period. Don’t wait too long; if you are getting an option to repay them faster with lower rates of interest then go for it. Get a statement from your existing lender regarding the loan and make sure to find about the fees involved in shifting the loan. Make sure you loan repayments are regular for easier home loan refinancing.
A lot of people look for home refinancing half way through the existing loan. The major reason for it is lower interest rates and the top up on the existing loan.
There are also many other reasons for it which might prove beneficial to you.
1.Saving on interests:
This is the most common reason. If the borrower has found another lender who is offering a lower rate of interest, and then he considers choosing home loan refinancing. This ultimately reduces the monthly EMI.
2.Shifting the fixed rates to the floating rates and vice versa:
If your lender is offering a lower rate of interest on floating interest rates or vice versa, you can shift your loan. Fixed interest offers fixed rates of interest till it is repaid. This is not the case with floating EMI, the interest changes over the time, sometimes they are lower sometimes they are high. Choosing wisely between both of them is an important task.
3.Top up loan:
Borrowers can also opt for top up loans apart from home loan refinancing. If the interest rates are low, it is a good idea to apply for the top-up loans. If the rates are similar for top up loans, then it is better to take it from you current lender only rather than opting for a new one. The chances of getting a top up loan are higher if the borrower’s loan repayment history is good.
4.Unhappy with the services from you current lender:
If you are unhappy with the service provided by your current lender, then it is better to move to a new lender. Delays in changes, not providing regular loan statement, these are the red flags and you should move on to the new loan lender.
5.Monthly income:
This is important to consider your monthly income. If your payment has increased and you have the capability to repay your loan quickly by increasing the monthly EMI, it is better to do that. But if the monthly income has reduced, it might be a better option to move your loan to a lender offering lower interest rates.
It is always better to repay your loans before the time period. Don’t wait too long; if you are getting an option to repay them faster with lower rates of interest then go for it. Get a statement from your existing lender regarding the loan and make sure to find about the fees involved in shifting the loan. Make sure you loan repayments are regular for easier home loan refinancing.
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