Taking up a home loan is a massive step in life. While this loan can help you save nearly around Rs 5 lakh in taxes, it even means making a commitment that will last nearly 15 to 20 years. Note that no matter whether it is a 35 Lakh Home Loan EMI or 15 lakh home loan EMI, you usually undergo few changes during your life. For example, your financial strength might decline or ameliorate, and there may be a considerable change in the rate of interest, Indian government policies and the economic state of the country. Here is why you must always ensure to keep a close eye on your home loan’s outstanding amount. A periodic review of your home loan proceeds can assist you in determining if your loan requires a top-up, foreclosure or balance transfer.
Purchasing a home comes with massive responsibilities and financial burdens, which, however, is worth each penny you spend. A home loan comes with a low rate of interest and a long duration that you can select based on your considerations and age. However, often an error or mistake that home seekers make is continuing with home loan EMI without even reviewing or checking the amount left for years by the end.
It is necessary that you do this, not just for budgeting but even for other crucial reasons that may be advantageous for your pocket. Read here about why you must review your home loan periodically –
Home loan balance transfer –
The rate of interest on loans continues to change. Even if you get an excellent deal when availing of a home loan, it is very much possible that over the years, you may come across lenders who may be offering competitive interest rates and better terms and conditions. It will be completely foolish for you not to change lenders in such cases. You must be able to do so without any kind of hiccup if you hold an excellent repayment history and decent credit profile. All you must do is go ahead with the balance transfer option. Ensure to show your income, do the KYC, hand over your employment proofs, existing loan documents, NOC from the bank and pre-closure with payment history statement. You will even require submitting all such documents to new financiers. Banks generally waive off the processing charges for the same.
Foreclosure –
A sudden windfall income or appraisal bonus may assist you in foreclosing your loan and paying a part of the outstanding loan to proceed to get your repayment tenure and loan EMI down. For doing so, you will require submitting a written application for foreclosure or part prepayment along with address and identity proofs and loan sanction documents. Few lenders might incur a charge for foreclosing the same. Note that you must take custody of your original property documents from the lender on closing your home loan.
Top-up home loan –
In case the originally disbursed loan proceeds are not sufficient to mitigate all your financial requirements, you can get a top-up home loan. For this, you will require filling up the form for the Home Loan Top-Up option and submit the relevant KYC documents such as your PAN card, identity and address proof, employment and income proof, a previous chain of documents and title deeds. The bank might levy a processing fee for your top-up home loan. A top-up home loan may be used for the same purpose as a personal loan, with the only difference being the interest rate of a top home loan is comparatively lower than a personal loan owing to its secured nature. For the same financial institution, you can avail a top-up home loan along with a balance transfer option.
Before you make up your mind about home loan foreclosure, you must consider the tax benefits that home loans provide with respect to principal repayment and interest constituent.
Want to have a home of your own? All of us know that the level of contentment derived from staying under the same roof is unbeatable. Why don’t you look at a few of the highly suitable home loan offers in the market?
While there is zero specific rule as to how often you must check up on your home loan, it is generally recommended to get this reviewed every year at least once to see the market rates and other major essentials. When you avail the opportunity to get a top-up on a home loan or home loan balance transfer facility from top reputed financial institutions, be rest assured about the hassle-free process.
A home loan is often a long-term commitment that stretches over 20 years. And hence, during this time period, there are many things that often change involving a customer’s interest rates, personal financial situation, government policies, and economic state. It is always necessary to keep a thorough track of outstanding amounts on the home loan. Striking a regular review assists you in making a financially prudent decision with respect to your home loan’s foreclosure, home loan balance transfer and top-up home loan facility.
To get the benefit of a lower rate of interest and better terms and conditions, you might want to transfer your home loan to another financial institution. For this, you must make timely repayments of EMI and check your credit score periodically. The balance transfer form must be submitted along with your KYC details, employment proofs, income proofs, existing loan papers, NOC from the bank and pre-closure letter with payment history statement. Processing charges are generally waived off by the new financial institution.
Ending note
Purchasing a home is a massive financial responsibility, meaning once you have availed of a home loan, it is necessary for you to timely review your home loan. There are various benefits that come with reviewing your home loan like saving by part prepayment or foreclosure, balance transfer facility by opting for a lesser interest rate and mitigating the expenditures during financial situations through a top-up facility.
