Borrowers home-loan-interest-rates apply for a home loan to buy or build their dream homes. Financing your own home from your own pockets is difficult given the high costs involved and so home loans prove useful. Since the loan quantum is high, home loans are offered for longer repayment tenures going up to 30 years. Over this tenure, the borrower can easily repay the loan without hurting his finances.
Since the loan tenure is long, it is advised to review your home loan periodically. Over the repayment tenure, many changes happen in the home loan market, and these changes affect your existing loan. So, a review becomes necessary. The review helps you analyse whether your loan is affordable, how you can reduce the interest burden and whether or not your lender is offering you the best loan terms. If your loan terms are not in sync with the prevalent terms of the market, you can switch your loan to another lender and enjoy better terms. So, a periodic review of your home loan is essential.
If you are wondering how to review your home loan, here are a few pointers to help –
• Assess the affordability of your EMIs
The first thing which you should review is your home loan EMI. Find out whether the EMI is still affordable for you or not. Throughout the repayment period, your income might increase or decrease. If your income has reduced, you should try and lower your EMI so that it becomes more affordable. On the other hand, if your income has increased, increase the EMIs to pay off the loan quicker and to reduce the interest burden.
• Make a prepayment if possible
If, during the repayment tenure, you get surplus funds at your disposal, invest those funds towards the repayment of your home loan. Home loans allow partial prepayment of the loan and when you opt for such prepayment, you can reduce your outstanding liability, which would also lower the interest rate charged on loan.
• Check the loan interest rate
The home loan interest rate is dynamic. The interest rates might increase or decrease depending on the economy of the country. If you have a floating rate home loan, any increase or decrease in the interest rate will affect the interest rate of your home loan too. However, if you have a fixed interest home loan and there has been a decrease in the lending rates, you would suffer from paying higher interest. So, in such cases, you can switch your home loan to floating interest rates with the same lender or with another lender through a home loan transfer facility.
• Assess the loan terms and conditions
There might be instances when you find another lender offering you better terms and conditions on your home loan than your existing one. When you review your home loan and see better terms and conditions elsewhere, opt for a balance transfer.
Reviewing your home loan is beneficial so that you have the best home loan terms. A regular review also helps you in making any necessary changes to your loan and so you should undertake a periodic review of your home loan frequently.