Tips for Refinancing your Home Loan
Despite what you think, there are some great ways to save money when you’re paying a Home Loan. You can find a lower interest rate or switch from a fixed rate to a variable rate or vice versa. You may also want to consolidate your debt, so that you reduce the overall interest you’re paying, for which you can use the Bajaj Finserv Online Debt Consolidator Calculator.
One optimal way to save more money when you’re paying your debt is to refinance your Home Loan. There are a few tips you can follow to make the process easier.
But before you go into the whys and wherefores of refinancing Home Loans, you need to know what refinancing a Home Loan actually means. Refinancing a loan is basically replacing your existing loan with a new one. This is done because the new loan will have different terms and conditions – ones that are more beneficial to you.
Know When to Refinance Your Home Loan
Let’s say you’ve taken a Home Loan after lots of deliberation and you got it fast and at a good rate of interest, too, because you used something like the Bajaj Finserv online Home Loan application. But then you realise that the interest rates have fallen, and you can’t capitalise it as you have chosen a fixed interest rate. If you’re in such a situation, then it’s a good idea to refinance your Home Loan. You’ll be able to reduce your interest rate and even change to a variable interest rate if you’re sure that the rates will continue to drop.
Apart from this, the following are some more instances when you can refinance your Home Loan:
- When you plan to sell your home before the tenure of the original Home Loan ends.
- When you want to reduce your monthly EMI payments. This can be done by extending the tenure of the new loan. For example, you prepay your loan early, say, five years before the tenure ends. Then you refinance the loan for the remaining principal amount for 15 years. Using the Bajaj Finserv Home Loan Part Prepayment Calculator can help you make the necessary calculations before you go in for something like this.
Learn How to Identify High Mortgage Charges
If there is only a nominal difference between the interest rates of your previous loan and new loan, you might end up paying more than you were with your previous loan. This usually happens when you mortgage assets with your refinancing lender and are required to pay heavy mortgage fees.
Choose the Right Lender
When you’re looking to refinance your Home Loan, don’t blindly choose the first lender you come across. Shop around a little to make sure you find a lender who offers you the best benefits. Most important of all, your lender shouldn’t levy high prepayment penalties on you.
Stay in the Know
When you’re planning on refinancing a loan, you need to keep your eyes open. Watch the market, keep track of interest rates, make all the calculations that you need to, and figure out exactly how much you will be saving. You should also research the new loan that you’re planning on taking, so that you will know how much you need to pay every month once you refinance your loan. An online Home Loan EMI Calculator will help you do this.
And how often should you refinance your Home Loan? As often as you need to keep saving money! When you have a Home Loan provider that makes the job easy for you, you don’t need to stop for as long as interest rates continue to fall. All you have to do is maintain a firm grip on market trends and interest rate forecasts to make sure you don’t have to pay any additional costs.