We live a life of ups and downs, with buying a house being one of the most significant decisions in one’s life. Not only is it a long-term commitment to turn a house into a home, but it also requires a lot of investment and, in most cases, debt.
With the rising cost of buying land and the housing market breaking the roof, it has become exceedingly difficult to purchase a house without pouring all of one’s life savings and also securing a home loan.
What if you have already purchased a house on a home loan, but it was on poor terms, the home loan interest rate was too high, or the EMI was not what you expected? Things are not over for you, as options are available for a better deal.
These options can come in the form of home loan transfer and home loan refinancing. Keep reading to determine what these options mean and decide which is best for you.
What is a home loan?
A home loan is a secured loan where you use your property as collateral to purchase it. It can be used to buy a home, construct it, renovate it, purchase a plot, extend the house, or even home loan transfer the balance to another lender for more favourable terms.
Which is better, a home loan transfer vs refinancing?
Before looking for a better option, let us examine these two terms.
Home loan transfer refers to a borrower shifting their existing loan to a different lender offering better terms, for example, shifting a home loan from Axis Bank to Bajaj Finserv due to more favourable loan conditions, such as lower interest rates.
Refinancing is when someone closes that particular loan account by paying the entire loan amount at once by taking another loan from a different lender, for example, taking a loan for the amount you would have to repay to the first lender, paying the loan off, and starting a new loan with the second lender offering better terms.
So which one among these is better? The answer would depend on your situation and requirements and what terms you are offered by the lender offering better terms.
In my case, though, I went ahead with a home loan transfer to Bajaj Finserv as it offered a lower interest rate, better tenure, and lower EMI making it a better option for me in the long run.
What factors affect housing loan eligibility?
While several factors impact home loan interest rates, the main things to look out for when opting to get a home loan or refinance or transfer the loan.
- Debt-to-income ratio
One can determine their DTI if they divide all their EMIs by their monthly income after all deductions.
- Loan Tenure
Longer loan tenure can result in lesser EMI but a higher final interest payout.
- EMI
Your loan might only be approved if it is 50-60 % of your Income or results in higher interest rates due to higher risk.
- Loan-to-value ratio
The loan-to-value ratio can significantly impact your home loan interest rate as a higher LTV can result in higher risk and, thus, the lender passing on a higher interest rate to you.
- Credit Score and History
Having a good credit score and history can result in you being offered better interest rates.
Which is the best app for a home loan?
When I was looking around for options, after quite a bit of research, I landed on Bajaj Finserv. It just offered the best terms for my specific needs. I wanted to consolidate my loan and get better interest rates, but I was surprised that it offered better tenure and EMI and allowed me to get some extra money to renovate my home.
This is why Bajaj Finserv is the best app for both home loans and home loan transfers or refinancing.
Conclusion
Both refinancing and transfer are great options to reduce the financial strain you might face when getting a home loan. Bajaj Finserv offers the best home loan transfer in India based on my experience, and I would go with them for any kind of loan I have to take in the future.