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Shifting the outstanding amount of an existing home loan from your current lender to a new one is known as refinancing a home loan. The practice is also known as 'home loan balance transfer' and is offered by almost all leading home loan financiers today. If you have repaid your existing home loan for a specific period – generally a year or more – you are eligible to apply for a loan refinance or balance transfer.
Several benefits of refinancing home loans make it a popular consideration among home loan borrowers. Read on to know more.
1. Lower the interest cost
Low mortgage rates offered by a lender are the most common reason for refinancing a home loan. By refinancing, you can save on the interest portion of the EMI. Most home loan EMIs are calculated using a floating rate of interest, which changes in response to the interest rate changes made by the RBI. However, as a home loan borrower, you may often notice that an interest rate decrease in the market is not reflected in your home loan interest rate. You can then renegotiate the existing loan at lower interest rates, or refinancing can be opted for. This can reduce your EMI burden.
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2. Change the interest type
In a high interest rate scenario, you may be paying a greater floating rate of interest. By opting for refinancing, a lower fixed rate of interest can be agreed upon, leading to interest cost savings. In the reverse scenario, refinancing with a lower floating rate of interest would save money if the fixed rate of interest is high. Therefore, refinancing allows the borrower to switch between floating and fixed rates of interest and save each month's interest cost.
If you have repaid existing home loans for one year or more, you are eligible for a FASTTRACK balance transfer with IDFC FIRST Bank. This is a fully online process that (as the name suggests) is completed in a fast-track mode.
3. Get Additional Funds
Refinancing allows you to arrange additional funds on top of your existing home loan. When you transfer your home loan to IDFC FIRST Bank, you can apply for a home loan top-up without furnishing any additional collateral. This is a top money-saving tip while renovating and furnishing your new home.
4. Enjoy Better Service
Many home loan borrowers opt for refinancing home loans when they are not happy with the customer service experience offered by their existing lender. Although a non-monetary benefit, a balance transfer can get you a lender that provides a better customer experience.
Conclusion
Refinancing home loans helps you save money in several ways. You can switch to a lower interest rate or choose between fixed and floating rates depending on market conditions. You can also save money on home loan benefits by using the comparatively cheaper home loan top-up option. With an IDFC FIRST Bank home loan, you get attractive interest rates, improved service, and a convenient and long-term payback tenure on your refinanced home loan. Apply for a balance transfer with IDFC FIRST Bank today!
Disclaimer
The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.
The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.idfcfirst.bank.in for latest updates.
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