As a Home Loan is a long-term commitment that requires you to be diligent in finance management for a period up to as long as 30 years, there may be a lot of hurdles in this long financial journey. There can be situations when you may want to transfer your existing Home Loan to a new lender due to various reasons like reduced Home Loan interest rates, low EMIs, added features, better service and customer support, and so on. Now, it is possible to do so by Applying for Home Loan Balance Transfer or Home Loan Refinance. Home Loan refinance is a process where you can transfer the outstanding Home Loan amount to a new lender at the reduced interest rate. The new lender makes payment to your existing lender to provide you with their own scheme.
Before moving into the explanations why one needs to refinance a loan, it’s imperative to grasp what Home Loan refinance really means. Refinance as the name suggests is choosing a new loan scheme or lender during the serving tenure of the present loan. In easier terms, refinancing means closing out the existing loan by transferring the outstanding balance to a new lender. In simpler terms, it is commonly known as a Home Loan Balance Transfer.
There are varied reasons of opting for a Home Loan refinance. Some of those are mentioned below:
- Falling interest rates:
Falling Home Loan Interest Rates is one of the foremost reasons to go for a Home Loan refinance. For someone who had taken a Home Loan at a high rate a few years ago, it’s the ideal time to avail the benefits of Home Loan refinancing and enjoy low EMI amount. The interest rates are going to increase from now onward, hence, it’s advised to opt for Home Loan Balance Transfer right now before it gets too late.
It is although essential to do all calculations related to the overall cost of transferring your loan to a new lender like interest rate, processing fee, loan transfer charges, and so on.
- Switching from fixed to a floating rate of interest:
For individuals considering a shift from fixed to floating interest rate or vice versa, refinance is a brilliant way. Look out for the best Home Loan interest rates providers, compare between the top five offers and choose an interest rate scheme that suits you the best.
- Unable to pay high Home Loan EMIs:
One among the most common reasons why a plenty of Home Loan borrowers opt for refinance is due to facing difficulty in paying high EMIs. Transferring your loan to a lending institution that offers a lower interest rate is a convenient option and can reduce your EMIs significantly.
- Flexible norms:
There are some lenders are not willing to change their norms. In that case, you may want to opt for Home Loan Balance Transfer.
For example, you are looking for a home improvement loan for some interior work, or a top-up loan. Your existing bank is offering you a less loan amount due to their strict norms, whereas, the bank in which you operate your salary account is more flexible here and offering a bigger amount to fund your needs. What will you do in such a situation? Choosing to refinance your loan, isn’t it?
- Poor quality of service offered by the present lender
Poor customer support or bad post disbursal services may lead a person to opt for Home Loan refinance. Many of the borrowers move to another lender because the existing one provides poor quality service to them. If a loan is taken from a bank, but the bank does not give you satisfactory service, it can be annoying. There can also be a possibility that the bank fails to offer reliable consumer support. In this situation, you may opt to refinance your Home Loan.
- More features and benefits
If you are looking for more added features and benefits like Home Loan top up, the benefit of discounted EMIs or reduced interest cost, and so on, you can avail Home Loan Balance Transfer facility.
These were some of the common reasons why you should avail Home Loan Balance Transfer.