A balance transfer is a process of transferring the outstanding balance of a loan from one bank to another. A loan is transferred to save interest and reduce EMIs by switching to a low rate personal loan as well as to avail additional top-up loans from the new bank.
If you have a loan that’s too expensive or too risky to continue to make payments on, you often can refinance it into a better loan. Your financial circumstances may have changed since you first borrowed the money, and more beneficial loan terms may be available to you. Whether you’ve got a home loan, auto loan, or other debt, it’s worth learning about what refinancing is and what benefits and risks it presents so that you can potentially shift your debt in a more manageable way.
Refinancing your Home Loan makes sense when the new lender –
- offers a lower rate of interest
- offers a higher loan amount
- permits switch from fixed to floating/adjustable interest rate
- permits reduction in loan tenure
- permits reduction in EMI
- offers better terms and service
Don’t refinance if –
- costs don’t justify it
- you are nearly through with your loan repayment
How is Home Loan Refinance Done?
The simplest way of refinancing is to get your new lender to settle the dues with your existing lender and take over the outstanding loan amount. Once you have decided on a lender who offers better terms and conditions, you may complete the documentation and other formalities upon which they would pay off the loan to the old lender and takeover the outstanding loan amount. You would then start paying EMIs to the new lender.
In life, we always look forward to progressive options – a better home, a better car, a better job, etc. Life would stagnate if we did not look at bettering what we are or what we have.