Home Loan Refinancing: What is it?
Refinancing your Home Loan can be a good option if you are looking to avail of more competitive interest rates or reduce your repayment tenure. Home Loan refinancing, also known as a Home Loan Balance Transfer, is a financial tool that allows you to transfer your existing Home Loan to a new lender. This refinancing allows for a chance to negotiate better repayment terms, such as competitive Home Loan interest rates, a longer tenure, and a top-up facility, if eligible.
Home Loan Refinance: Should You Go Ahead With It?
While refinancing your existing Home Loan always sounds like a good idea, it should be well thought through, like any other loan. Let us take you through a couple of scenarios under which you can consider a balance transfer, and by extension – refinancing.
Reduce the Rate of Interest
A reduced interest rate should be the primary factor behind your decision to migrate your Home Loan to a new lender, as it saves you a great deal on your interest outgo. For example, if you have taken a Home Loan of Rs.50 Lakh with a tenure of 20 years at an interest rate of 8%, your total interest would be Rs.50.3 Lakh. But, if you are offered a reduced rate of interest by your new lender, say 7%, for the same principal amount, your total interest would be Rs.43 Lakh.
Consider what a new lender is willing to offer and weigh all options to make informed decisions before availing of a Home Loan Balance Transfer.
Better Customer Service and Facilities
Besides financial benefits, transferring your Home Loan can also lead to improved customer service experiences. Many lenders offer enhanced facilities such as streamlined online account management, digital loan processing, and access to pre-approved offers for various financial services. These services simplify the loan management process.
Also Read: Floating vs Fixed Interest Rate Home Loan - Which One is Better
Shorten the Tenure
Along with the benefit of reduced rates of interest, you will also have the option to cut down your loan tenure with a Home Loan Balance Transfer. This will help you service your loan faster.
Opportunity to Avail of Additional Credit
If you opt to refinance your Home Loan, you get the opportunity to take up an additional loan. This is also called a Top-up Loan. It can be used for any purpose, such as refurbishing your home, paying for business expansion, or debt consolidation. Bajaj Housing Finance offers a Top-up Loan facility of Rs.1 Crore* or higher to eligible applicants.
Home Loan Refinancing: Things to Keep in Mind
It is advised to start Home Loan refinancing early. During the initial days, a major portion of your EMIs goes towards interest payment. So, if you opt for refinancing during this time, you ultimately pay reduced interest and save more.
On the other hand, if you avail of a balance transfer in the latter half of your tenure, you have already paid the bulk of your interest liability. Thus, your savings are relatively lower in this scenario.
*Terms and conditions apply.
Also Read: Know the RBI Guidelines for Home Loan Balance Transfers
DISCLAIMER:
While care is taken to update the information, products, and services included in or available on our website and related platforms/websites, there may be inadvertent errors or delays in updating the information. The material contained in this website and on associated web pages, is for reference and general information purposes, and the details mentioned in the respective product/service document shall prevail in case of any inconsistency. Users should seek professional advice before acting on the basis of the information contained herein. Please take an informed decision with respect to any product or service after going through the relevant product/service document and applicable terms and conditions. Neither Bajaj Housing Finance Limited nor any of its agents/associates/affiliates shall be liable for any act or omission of the Users relying on the information contained on this website and on associated web pages. In case any inconsistencies are observed, please click on contact information.
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