Home loans are secured advances with a repayment period of 20 – 30 years, which means borrowers spend a significant part of their lives servicing these loans. On top of that, a high-interest rate can create financial stress for borrowers.
In such situations, borrowers can adopt measures such as home loan transfer to make repayment of the existing loan more affordable. It is a facility that enables borrowers to switch the outstanding loan amount from their current lending institution to another lender offering home loans at a more favourable interest rate.
However, you should consider the following points before opting for home loan refinance –
- Select a suitable time to refinance a home loan
The interest component during home loan EMI payment is higher during the initial years compared to the principal amount. Towards the farther end, however, the principal amount increases while the interest component reduces. Therefore, you should calculate the right time to make a loan balance transfer so that you can avail its benefits.
- Estimate the difference in interest paid
Make sure that there is a considerable difference between the interest you are paying to your current lender and what you will be paying to your new lender. You can use a home loan balance transfer calculator to compound how much you can save with refinancing.
Also Read: Easy Steps for Home Loan Transfer
