Refinancing your home loan can save you a lot of money and time. One can choose to refinance owing to several reasons like lower interest rate, lesser or higher time limit to pay off the loan, to convert the existing loan from adjustable to a fixed rate of interest or vice-versa or to procure more funds on the existing fund.
Whether one wants to refinance the existing home loan or not depends on personal choice, but while making this choice one needs to take a lot of things into consideration to ensure that the decision is taken at the right time to avail of all the benefits of refinancing a home loan.
Here are the best reasons and time to avail the benefit of refinancing a home loan:
- When you get a lower rate of interest: Refinancing can cost you a certain percentage of the principal amount, thus it very important to assess whether the decision of refinancing your home loan is worth taking or not. According to financial experts, the best time to refinance loan is when you can get a rebate of at least 2%. However, there is a set of experts who believe that even 1 to 1.5% of the lower interest rate is also an incentive.
- When you can get to change the tenure: There are some banks or financial institutions which do not get the liberty of increasing or decreasing the tenure in between. If you get the chance to change the tenure and especially lower down the same you must refinance your home loan. Making no changes in monthly EMI’s for lesser time can help you save a lot of interest that you may end up paying if tenure remains the same.
- When you get to convert your loan from floating rate of interest to fixed one: At times few banks come up with various rebates on the interest rate, to avail such offers you may have to opt for refinancing your home loan. For eg., if you are paying a floating rate of interest which remains between 8 to 9% and in between, you get to know that some bank is offering interest rate lower than 8% then it is advisable to refinance your loan to that particular bank with a fixed rate to avail the benefit of the lower interest rate.
- When you can get top up on existing loan amount: Some people need to top up on their existing loan amount for construction or any other personal expense but not all banks offer this facility. Thus, if you are getting the same while refinancing the home loan then it is advisable to refinance home loan. Also, by the time of refinancing usually the rate of your existing property apprises making it easy to avail of higher loan amounts at the same rate of interest.
If you are getting any of these benefits of refinancing a home loan Bundoora, then it is certainly advisable to do the same.