Home loan Refinance refers to transferring your existing home loan to some other financial institution such as any other bank or NBFC or housing finance company for majorly two important purposes. This include reducing the current rate of interest and hence EMI ,or to get topup on your existing home loan for any further home improvements. It could also be the combination of both the benefits while going for refinancing.
Important points to remember while using a home loan refinance calculator
- The impact of the pre-payment penalty is important: Banks can easily charge a pre-payment penalty for fixed home loan rates. This is not possible for floating loan rates. So, if you are dealing with fixed loan rates, keep this point in notice.
- Keep away from teaser loans: refinancing puts you in tough situations. When you contact a new lender, he/she may offer you low-interest rates initially.You need to understand that this refinancing should not get you in higher debts. So, keep a keen eye on such offers and protect yourself from it. Understand the promotion rates properly.
- The amount, tenor, and interest rates are vital parameters: people avail online home loans for a particular tenor at some interest rate. These parameters directly affect your benefit of using a refinancing system. If you have high-interest rates, shifting to a refinancing system will help you. If you have a high loan amount, you opt for refinancing. But, if the amount of refinancing itself is high, your advantages get reduced.
What are the reasons to apply for refinancing?
Banks are always planning up new offers to attract borrowers. On the other hand, they say a straight no to cut down the interest rates for existing borrowers. This is why people get attracted to other lending authorities. They have an expectation to have lower interest rates. They see the chances of saving a lot of money. High-interest rates are one of the prime reasons for online home loan borrowers. Some of the main reasons to opt for refinancing are:
- The expectation to have lower interest rates
- A need to shift from fixed loan rates to floating loan rates
- Unhappy with existing bank services
A refinance service can be beneficial under all fair conditions. You must use a refinance calculator before deciding whether to opt for this service or not. Decide wisely and get the best possible way for yourself.