Top 3 Facts To Know Before Refinancing Home Loan
Generally, home loans have a longer repayment tenure. And the normal tenure of repayment is within 15 to 25 years. Having a home loan for the long run, current market conditions tend to affect interest rates. The idea of a home loan refinance comes when you want to get benefits of decreasing interest rates or consider changing a lender due to any unsatisfactory services.
In addition, refinancing home loan means restructuring a home loan. However, a case of restructuring will happen when you have some extra money and you want to pay a portion of your home loan. And you want to reduce the duration of the home loan to pay a very low monthly EMI. This is possible when you consider refinancing your home loan.
Top 3 Ideas To Know Before Refinancing Home Loan
Here, we are going to focus on the top 3 interesting facts for refinancing home loan.
Indications of Refinancing on Income Tax
Generally, the interest paid on a good home loan is deducted from your monthly income. Thus, creating an EMI at a much lower rate of interest translates to a lower interest deduction from your monthly income. You may have to pay a lot of taxes. A good way to know this is to consult a CA or financial advisor and then you should plan your refinance accordingly.
Loan Tenure and Interest Rates
In these days, loan tenure and interest rate are two important reasons lenders refinance their loans. Your refinancing needs should always be based on the loan tenure and interest rates. The loan period and interest rates are directly affected by the monthly EMI you pay. When refinancing, you can either choose for a much shorter tenure and pay a higher monthly EMI, or extend your tenure and pay a lower monthly EMI, but with extra interest.
Interest Rates
Current market fluctuations cause fixed interest rates to fluctuate while floating interest rates are affected by very high fluctuations. Fixed interest rates remain largely constant. Nowadays, all lenders offer borrowers with a good option within floating rates and fixed rates. Before refinancing your home loan, do some analysis to find out which of these benefits you have in the long term, depending on the economic conditions. Thus, you can consider a fixed interest rate for a few years and then move to floating rates.
Read more: Top 3 Factors To Understand Before Refinancing Your Business Loan