What you Should Know Before Opting for a Home Loan Consolidation

Getting a home loan these days has become extremely affordable, thanks to flexible norms and lower interest rates. While some people only take home loans to buy a home, others get a little ambitious. In that, they top up their home loans to carry out some home improvement projects.

Of course, this means that they end up paying for two different loans, which may seem achievable in the beginning but can turn out to be a major financial burden eventually.

So, what alternatives do these individuals have? The loan debts certainly aren’t going away for at least the next decade. What other options do they have? Obviously, going for a debt consolidation loan sounds like the best choice.

If you or any one of your closest acquaintances is in a similar predicament, you’re in the right place. Home loan consolidation has become a norm now. Here’s a guide that that can help, if you are looking to transfer a Home loan emi. This article tells you all about refinancing your home loan to consolidate your debt.

How does Refinancing your Home Loan Work?

For starters, refinancing a home loan into a debt consolidation loan involves combining your multiple monthly loan payments into a single one. When planned carefully, a consolidation loan can help you save a lot of money too.

However, you should opt for a refinance only when it makes sense financially. Say for instance, you have a home loan of Rs.20 lakh and a home improvement loan of about Rs.2 lakh, going for a consolidation doesn’t make financial sense.

Also, you need to be sure that the interest rate for Home loan emi you’re getting on your new loan is lower than the ones you are currently clearing off.

Things to Do Before Getting a Home Loan Debt Consolidating Loan?

There are certain things you need to analyse before you opt for a debt consolidation loan so that you don’t overburden yourself.

Here are a few points you must consider:

1. Talk to your Lender

Most of the lenders will be willing to hold on to their business which means if you talk about the terms of the loan agreement with them, there’s a chance that you can come to an amicable solution. Imagine you’re having difficulty in repaying your loan because of the interest rates; a discussion with the bank will most likely help you get a much better deal.

2. Figure out what you Need Exactly

A consolidation loan will definitely be beneficial if you’re unable to keep up with multiple repayments. But one main question you need to ask yourself is about the lifestyle changes you will have to make. Consider the deal a new lender is offering and how that deal is going to help you.

3. Calculate the Cost of a New Loan

As mentioned earlier, you’ll have to pay an application and a processing fee when you opt for a new loan and on top of that you will also have to pay a penalty to foreclose and exit a Home loan emi deal.

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