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When should you Refinance a Home Loan?
By Anupama Deshpande | Sep 7, 2018

Taking home loan for buying a house is very easy but to manage your home loan properly is a difficult task. You need to update yourself with current rate of interest on home loan which are being offered in the market, calculate your savings if you opt for balance transfer of your home loan, etc.


There are a number of reasons to refinance your home loan but it makes sense to refinance only if the savings after refinance offsets the cost of refinance. Some of the chief reasons to go for refinancing your home loan are outlined below:

(1) To reduce your Home Loan Interest Rate

This is the primary reason to refinance your home loan. For this purpose, you need to check as to what is the interest rate of your existing home loan and what is the interest rate that other banks/ NBFCs currently offering. If the interest rate that you are currently paying is significantly high then you must go for refinancing.

Suggested reading Is it beneficial for home loan borrowers to shift from base rate to MCLR rate?

(2) To shorten the Tenure of your original Home Loan

If you want to shorten the tenure of your original loan and existing lender is not agreeing for the same then you have to look for refinance your home loan with a different lender who is ready for refinancing your existing home loan.

(3) To change the type of interest from fixed to floating at lower rate of interest or vice versa

In case you want to change the type of interest from fixed to floating at lower rate of interest or vice versa, and your current lender is not ready to provide this facility on the existing loan that you have taken, then you can consider for refinancing your home loan.

(4) To get Flexi Payment Option

If you want to switch to flexi payment option for EMI which is not being offered by your current lender, then you may think of refinancing your home loan.

Before opting for refinance of your home loan, you must consider following points for sure:

  • What are the processing charges for refinancing your home loan?
  • How much is the outstanding loan amount?
  • How much difference in interest rate are you getting?
  • What is your current Credit Score?
  • What are the terms and conditions of new lender?

Suggested reading What are the Prerequisites for Top Up Home Loan?

About Anupama Deshpande
Anupama is a Co-Founder of CodeForBanks.com. She is an MBA (Finance) and Chartered Financial Analyst (CFA). She also carries a Fellowship degree in Life Insurance Sector and is a Master of Computer Application (MCA). She is an expert in Finance Field with an experience of over 18 years on different managerial positions in finance industry including Stock Market, Depository and Mutual Fund Sectors. Apart from that she has remained for few years in the field of marketing as well. Her suggestions and advice for investments have been very useful to many people.
Her vast interest & expertise in the field of finance have encouraged her to write the articles so that others can also get benefitted out of them. She never loses any opportunity to learn and be creative. She is a valuable asset for CodeForBanks.com & important resource to all those around her.
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