5 Reasons to Transfer Your Uncomfortable Home Loan or Mortgage

Transferring your home loan or refinancing your mortgage means applying for a new loan to repay an existing loan from another bank or NBFC.

What do you think when you first apply for a home loan? You must have spent a lot of time comparing home loan options from different lenders and opted for a home loan bank with the lowest interest rate while meeting all your requirements.

However, the home financial facility market is quite competitive and changes over time. The home loan you initially chose may be the right option, but is it still the best for you?

Life is constantly changing, and when we are always looking for advanced options in our career, car, and even clothing, why should we ignore our mortgage? You may find that your current home loan is not as flexible as you would like, that you are being deprived of all the exciting offers and benefits available today, or that interest rates are not as affordable as they used to be. In such cases, keep in mind that other banks or NBFCs are available to refinance your mortgage on better terms.

How to transfer your home loan

The process of refinancing a home loan is simple:

1. Choose a lender that offers better terms (lower interest rates, more flexibility, deferral, free life insurance, etc.) on your existing home loan 

2. Complete documentation work and other formalities 

3. The new lender will then pay the arrears with your existing lender and receive the outstanding loan amount. 

4. Start paying EMI to the new lender 

5 Reasons to Transfer Your Home Loan

Here are some reasons why you might want to move your home loan:

1. Low-interest rates: Why do many people choose to refinance a home loan is the lowest interest rate? Wouldn’t you be tempted if another lender was willing to pay you a lower interest rate on your existing home financial facility? Refinancing your mortgage will help you save money and reduce the total interest cost and EMI.

The easiest way to find low-interest rate lenders on your existing home financial facility is to visit online portals and compare interest rates offered by all reputed banks and NBFCs under one roof. You can also compare other features like maturity, processing fees, foreclosure charges, etc., and apply for the most affordable home loan in minutes.

2. Change from a floating interest rate to a fixed one and vice versa: You may be traveling on one of these boats and pay a higher floating interest rate or a fixed interest rate. The wise decision here is to switch to a lower interest rate – float or repair your mortgage by refinancing.

Let’s try to understand the situation with the help of an example.

Suppose two years ago, Siddhartha opted for a rupee home loan. Forty lakhs at a fixed rate of 11% for 25 years. He was paying EMI in rupees. 39,204. After paying EMI for two years, the outstanding balance was Rs. 38,92,226. He then decides to go to another lender willing to offer 9% pa still has to pay EMI for 23 years. By opting for refinancing, he reduced his EMI to Rs. 39,204 to Rs. 33,445. And a major one of 23 years of influence.

3. Add a top-up loan: In addition to getting the best deals on interest rates, maturity is another big reason behind refinancing a home loan.

For example, a successful Rupee has taken a home loan of Rs To buy a property worth Rs 50 lakh. 6 million 8 years ago. Even after paying EMI for many years, today, the loan amount stands at Rs. 35 lakhs. However, property prices have risen and stood at Rs Now 90 lakhs. Suppose Sarthak now needs Rs 20 lakh to renovate his house or any other investment.

So, Sarthak can apply for a home loan worth Rs 60 lakhs, in the same property, after settling the amount due to him, 30 lakhs. In this case, the best way is to transfer the arrears to a new lender at a lower interest rate and top up the home loan.

4. Below the average service of your existing bank: If your current home lender fails to provide you services properly or enjoy your requests/queries, it is time to refinance your mortgage. For example, if loan statements are not issued to you on time or customer care services are not responsive, you may choose to go to a lender known for providing better service.

5. Changes in your financial situation: If you face a problem in life when your income either increases or decreases, it will affect your ability to pay EMI. If you are in a better financial position, it is time to apply for a home loan refinancing and reduce your home loan term. And, if your monthly income decreases or a financial crisis arises, it is advisable to choose mortgage refinancing to reduce the EMI amount by extending the loan term.