Save More by Refinancing your Home Loan

There is a way to save yourself from all of these troubles. Nothing can take away your peace and happiness if you simply refinance the home loan when the burden of EMIs is too much.

Refinancing – what does it mean?

In the easiest words, Home Loan Refinancing means home loan balance transfer. It means that you have the option of switching to a different lender and avail lower rates of interest if your current lender’s rate of interest is bothering you. Home loan transfers take place when the total principal amount (unpaid) is transferred from your current bank to a new bank of your choice offering lower rates of interest. It can also be done to enjoy a top-up on the actual loan amount. The current lender of the home loan will get the unpaid amount and the new bank will start receiving the new equated monthly instalments at a lower rate of interest.

How to go about it?

• Lower Rates of Interest – A major reason for the borrowers to choose home loan balance transfers is the rate of interest. If you are paying a rate of interest that is substantially higher than that offered by another lender in the market, you would instantly switch to the lender offering lower rates. This will bring down the interest and Home Loan EMI for you effectively. This will also allow you to save a lot more than before.

• Reducing Loan Tenure – Understand that the EMI payments and the loan tenure are inversely proportional to each other. If the loan tenure is longer, the EMI that you pay will be lesser. However, if the tenure is too long, you end up paying higher interest in total. The tenure can be altered when life changing circumstances take place like amazing gains in business, promotion in jobs, etc. These circumstances allow you to take the burden of higher EMIs and in turn, help you to be debt free sooner.

• Add-on Opportunity for Loan – You can easily avail the opportunity of enjoying add-on funds for registration, expansion, or home improvement purposes.

• Tax Benefits – If you opt for a home loan from a bank or a lender, you will get some exemptions and benefits. Section 24 of the IT Act states that the interest amount paid on the sum borrowed for repair, construction, acquisition, reconstruction or renewal of a property is eligible for tax exemptions for up to Rs.2 lakh. However, this is the maximum tax deduction that can be availed by you under the prevailing tax laws. The only condition for this is that the property must be self-occupied. For a property that is on rent, there is no limit on the deduction amount.

• Diversification of Investments – You can choose to use utilise the home loan transfer to increase the loan tenure. This will reduce the EMIs for you. This option is viable if you find a better option for the diversification of your investments.

Bottom Line:

Owning a house of your own can be a dream come true as home loans pave the path that makes it a reality. However, if the instalments are too much for you to handle, opt for home loan financing or housing loan balance transfer. This will take off the heat and allow you to enjoy the peace of mind you deserve.