Refinancing your Home Loan means that you get a new loan from a new lender. It is a transition from one lender to another replacing your existing loan with a new one. The reasons for this action is generally a lower rate being offered, or because of the need for the borrower to increase amount to be borrowed. Other factors which lead people to refinance are reduced fees and charges on prepayment and foreclosure.
The few prominent factors depending on which you can decide when to refinance your loan are:
Interest rate savings- This is one of the most common reasons to opt for refinancing your Home Loan. Switching to a new lender because of lower interest rates can help you save a lot of money. Although, it is not that simple every time. There are many aspects to check before you jump to another lender after seeing attractive interest rate.
Moving from floating to fixed interest rates or the other way around- A floating rate is that rate that fluctuates according to market conditions. Whereas fixed rate is one in which the interest rate remains fixed. It could be that you want a transition from fixed rate to floating rate or vice versa depending upon which one is lower.
Top up opportunities- A motivation for you to choose refinancing is when you find a new lender offering you a larger amount at same interest rates.
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