Buying a home, whether for investment or residential purpose, can take years to materialize and given the prices, few can afford to pay such a whopping amount. In such situations, buyers inevitably turn to banks for home loans. Home loans are a great way to ease financial stress and handle the EMIs comfortably. The best way to get the most suitable loan is to research online and find a bank or NBFC that offers a low rate of interest and better offers on your home loan.Also, there is another tip that you can keep in mind to get a beneficial outcome from your loans—review your home loan.
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What is reviewing?
Reviewing basically involves conducting an analysis with the intention to change the terms and conditions of your current loan. In simpler terms, it is a quick review of the various features of your home loan to determine if it’s still the best product for you. If your financial situation is likely to change in the coming year or you want to save some extra bucks on your mortgage, a home loan review could be the best option for you.
How to review your home loan?
If you’re trying to figure out if your current loan is benefiting you or not, here are some factors you must consider while reviewing home loans.
Rate of interest:
It is one of the most important points that you must consider when giving your home loan its yearly health check. Compare fixed and floating interest rates offered by various lenders to check whether you are paying an unreasonably high-interest rate or not. In case, the other lender is offering significantly lower interest rates, then you have the option to make a switch.
Home loan fee:
Your current bank may have applied penal charges clause in case of home loan balance transfer. The charges may be higher in the initial years and may go down with time. So, before you opt for a transfer, ensure that all additional fees and charges will be worth paying for, if you do not have a lot of time left to repay the loan.
Features offered by other lenders:
The features on your current home loan may not be that relevant in accordance with your current priorities, which is why it’s important to take a closer look at your loan features during your home loan review. Do a thorough review to check if you need these features or not. Also, a quick look at what other mortgage providers are offering can help you see if your home loan offers you all the features you need.
Here are some of the key features you need to look for in new lenders:
This facility allows you to access extra payments in case of an unexpected financial crisis. It allows you to borrow money you’ve already repaid with a variable rate of interest. You can repay the loan as per your convenience. If your current home loan does not provide such a facility, then you can transfer your home loan to a new lender offering this facility.
This feature allows you to invest extra money from your saving account to home loan to reduce your monthly payments. During your home loan review, you could check whether you can benefit from such a facility on your current loan and link your savings account to your home loan.
Additional repayment facility:
In the case of fixed interest rates, lenders generally do not allow you to make lump sum prepayments in place of EMIs. Some banks provide additional repayment facility but charge penalty for the same. Hence, it is necessary to choose a lender that offers a prepayment facility with no or less penalty charges.
Reviewing your loan every year is recommended as it helps you clearly assess and identify ways to make the most of your loans and save as much money as possible.