Is There a Difference of 25-50 Basis Points in Home Loan Rates? Think of Refinancing! - Loan Trivia

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Wednesday, 8 April 2020

Is There a Difference of 25-50 Basis Points in Home Loan Rates? Think of Refinancing!

 
Most borrowers refinance their home loans because of the low interest offered by other HFCs. An interest rate difference of 25-50 basis points can save you significantly on the interest amount paid. 
Here are a few factors you should consider before applying for a home loan balance transfer –

- Interest rates offered by the housing finance company

The interest rates are the primary factor that borrowers should consider before opting for this facility.
They can use an EMI calculator to find out the best possible options to apply for a home loan transfer and benefit from the lowered basis points. 

- EMIs and loan tenor 

Although most borrowers opt for affordable EMIs, it is advisable to choose a higher installment to reduce the total payable interest.
Similarly, lower tenor results in higher EMI payments but enables you to close the loan in advance. This can also save a significant sum on interest payments.

- Outstanding loan amount

Borrowers should consider the remaining tenor of their home loan before transferring. Opting for balance transfer during the initial repayment period will help them save the maximum on interest.
Borrowers can compare their total savings using an online home loan balance transfer calculator to avail the maximum benefits. 

- Additional funding 

Applying for a balance transfer makes the borrower eligible to opt for a top-up loan with no usage restriction. It is offered with a lower rate of interest compared to a personal loan and can become an ideal source of funding other needs.

A difference in 25-50 basis points can be an ideal time to apply for a balance transfer. Nonetheless, while calculating the savings, borrowers are advised to consider other charges associated with the takeover as well.

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