To Apply and Manage
your Home Loan.
Download our Mobile App
Indiabulls Home Loans
Apply
Online

India's 1st Completely Online Home Loan!

  • e-APPLY

  • e-SANCTION

  • `

    e-DISBURSE

Start your eHome Loans Process Now!

Apply Online
OR

Download our Mobile App

Enter Mobile Number to get app on your phone

+91
GET A
CALL NOW

Fill in the details below

  • Generate OTP

Should you refinance your home loans if the rate of interest is falling?

Should you refinance your home loans if the rate of interest is falling?
 

When the base rates reduce, the home loan rate of interest gradually falls. This is great news for the new home loan seekers who can avail a home loan now at a lower rate of interest. Borrowers who have already taken a home loan at a higher rate of interest would be at a loss. Banks would now try to grab a greater market share, by inducing new customers for taking home loans at a lower interest rate. But what about the existing customers who had taken a loan before the interest rates fell? Should they refinance their loan to avail the benefit of a falling interest rate? Refinancing of a loan essentially means restructuring the existing loan, in terms of tenure, interest rate and type. Refinancing a loan involves varies costs such as the pre-payment penalty by the existing bank and the processing fee by the new one. Additionally, these charges differ from bank to bank. Therefore refinancing is not always considered a correct decision. Learn more about home loan refinancing here. Before making a decision, you must check whether the savings made after opting for refinancing is higher that the costs involved in refinancing. If it isn’t, then opting for refinancing is not the correct decision. If the refinancing interest rate is lesser than the current interest rate by 1% or more then you should ideally opt for refinancing. If you anticipate a reduction in the interest rates, you must refinance your high fixed rate loans. Similarly if you anticipate the rates to increase you must go in for a fixed rate refinancing. The tenure and the interest rate are directly proportional to each other. The longer the tenure, the higher the total interest paid and vice versa. So if you get a salary increment, refinancing your home loan at lesser tenure is the best option. Refinancing a loan is not always the best bet when the interest rates are low. It could work against you if the costs involved are higher than the savings made. Use a home loan EMI calculator and calculate the difference. Work the math and then make a conclusive decision. Related Articles:

The post Should you refinance your home loans if the rate of interest is falling? appeared first on Indiabulls home loans.

Related Article
Types of Home Loan Charges

Types of Home Loan Charges

Most people fulfil their wish of becoming homeowners by taking out a home loan. It is the easiest way to afford a property as one can pay for the house in monthly instalments.

MCLR in Home Loan

MCLR in Home Loan

The interest rate is one of the most important components of a loan, especially in the case of a high-value loan that lasts for 2 decades or more; the home loan.

Home Loan Terminology

Home Loan Terminology

Each one of us, at some or the other point in life, dreams of becoming a homeowner. Having a house to call our own is the surest way of being financially secure.

Share your comments on the article
0 / 3000
Read all comments

No Comments