Sometimes your decision to purchase a home does not align with the best interest rate regimes. And thus sometimes you may feel you are paying higher interest on your home loan than the current market rates. Instead of regretting your decision or feeling cheated you may opt to refinance your home loan. Here is how you can do it:
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Home loan refinancing or home loan balance transfer is the facility where the existing loan is paid off by availing a new loan. Borrowers of home loans opt for such a facility in case they want to avail of a lower interest rate or increase/ decrease the tenure of their loan. There are several other factors due to which people opt for home loan transfers. Home loan refinancing comes with a large number of benefits and thus while deciding to avail such a facility you need to plan carefully.
The easiest way you can refinance your home loan is by transferring your existing loan to a new lender. To begin with, you have to conduct good research of the market and understand if the transfer is beneficial for you. Compare the loan offers by various lenders and decide on the one who offers better terms on your loan.
The next step is to settle your dues with your existing lender and transfer the outstanding amount to the new lender. You have to submit complete documents and take care of other formalities to facilitate the transfer of your loan to your new lender. Start paying interest to the new lender at a better rate or terms on your home loan.
You can consider the below-given situation to understand why borrowers opt for home loan refinancing:
People often consider refinancing their mortgages when they find an avenue to save interest costs by availing a loan at a lower interest rate.
Borrowers who have availed loans during higher interest rate regimes may feel they are paying higher interest rates when there are rate cuts. In such cases, many borrowers want to switch their home loans to floating interest rate loans to save themselves from excess interest payments. If your existing lender does not allow you such flexibility, then you can consider switching to other lenders.
See Also: When To Switch Home Loan?
Home loans are usually offered for extended tenure like 20 to 25 years. You can opt to refinance your home loan if you believe you can clear the loan with lesser time. A change in your financial position can work in your favor in availing of the refinancing option.
Due to added family obligations or expenses, you may want to lower your monthly EMIs and hence look for longer repayment tenure or lower interest rates.
After the disbursement of your loan, you may find that the customer care services of your lender are not satisfying or you may feel that you can get a better deal elsewhere. In such circumstances, you may consider switching your loan to some other lender.
See Also: How to Select the Best Home Loan?
Refinancing your home loan can give you the following advantages:
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