A home loan is an effective method for financing a home purchase. Generally, home loans are an extended affair usually running from 15 to 30 years, during which there could be several changes with the policies of the lenders. With time, loan schemes and government policies change and so does other policies that are governed by banks and housing finance corporations. The rate of interest levied on a home loan depends on various factors. Borrowers must, therefore, review their home loans regularly to get some monetary relief as well as make better decisions regarding the home loan. It is always advisable to keep track of one’s outstanding loan amount.
The loan scheme or housing loan interest rate that worked for you when you took the loan might not work for you now. After all, people’s personal life, as well as financial circumstances, change with time. With time, lenders bring new products into the market. They also change the interest rate and run other promotions to attract consumers. These changes may directly or indirectly affect your loan. This is why a regular review of your home loan will aid in making prudent financial decisions in the long run. Check 8 Pro Tips To Upgrade Your Marvel Future Revolution Gameplay
Some of the features affected by a home loan review are provided below:
- Home Loan Balance Transfer: Regularly banks and Housing Finance Corporations introduce new interest regimes with different interest rates on par with the repo rate issued by the Reserve Bank of India (RBI). If you review your home loan regularly, then you may find the idea of transferring your home loan with a lower/better interest regime enticing. To be able to enjoy the balance transfer feature, borrowers should maintain a decent credit history, which includes paying the monthly instalments on time. Maintaining a credit score of 750 is highly recommended. The documents required for this facility include a balance transfer form, KYC, income and employment proof, no objection certificate (NOC) from the bank, and foreclosure letter along with the statement of payment history. Most lenders do not charge a processing fee during a balance transfer from different banks or financial corporations.
- Finding New Features of Home Loan: When you review your home loan regularly, you have a better idea about the intricacies of the working of your home loan. You can ask the lenders to change your agreement policies according to the changes in the government policies, which, in turn, will affect your loan repayment directly or indirectly.
- Better Decision While Opting for Foreclosure: Financial situation of a borrower can change due to promotion, increase in salary, new income sources, reduced expenses, gratuity money, bonus, and others. In such situations, you can make wise decisions while reviewing your loans regularly. For example, you can opt for foreclosing the entire loan amount or pay part of the outstanding loan amount to reap more benefits. If you wish to increase the payable EMI or decrease the loan tenor you can opt to pay part of the outstanding loan amount. A regular home loan reviewer could easily understand the optimum time for foreclosing the home loan. It should be noted that for floating rate of interest no penalty is charged for foreclosing the loan amount.
- Meet Changes in Financial Requirements: A home loan review allows you to assess your loan amount as well as helps determine if the current amount is enough to meet the financial expenses. You can opt for a top-up loan in addition to the existing housing loan amount, in case of any additional financial need. A top-up loan is a personal loan that can be taken over the existing debt, from the same bank or another. Leading lenders, such as Bajaj Housing Finance, offer top-up loans at a reasonable interest rate, only marginally higher than that applicable on the home loan. With Bajaj Housing Finance, you can opt for a top-up loan worth Rs.1 Crore or even higher, subject to eligibility. The documents required for top-up loan, like in the case of a balance transfer, are minimal.
A home loan is a long-term commitment, and if you are not reviewing the conditions correctly, you might have to pay too much ultimately. It is easy to fall into the comfort zone of an initial interest regime of your home loan, and expect the product in hand will give you fruitful gains. However, a regular review of your home loan keeping the above factors in mind will help in saving and managing your loan in a better way.