Securing a home loan is a critical step in achieving the dream of owning your own home. However, many borrowers settle into the repayment process with the original terms and rarely revisit them. This can lead to missed opportunities to improve financial efficiency.

Regularly reviewing your home loan can help you figure out how to save money on a home loan over time. Whether it’s through securing lower interest rates or shortening your loan tenure, a periodic review can uncover significant savings.

In this article, we’ll discuss various reasons to review your home loan regularly and provide actionable home loan refinancing tips to help you make the most of your repayment journey.

1. Interest Rates May Have Changed

This is one of the most significant reasons why you should review your home loan annually or even more frequently. Knowing when to review interest rates is crucial, as they are often influenced by factors such as inflation, economic conditions, and government policies.
If interest rates have dropped since you took out your loan, you could refinance or switch to a lower-rate loan, saving a significant amount in interest payments. Even a small reduction in the interest rate can lead to substantial savings over the loan term.
Tip: If you notice that interest rates have decreased since you took out your loan, speak to your lender about renegotiating your rate or consider a home loan balance transfer.

2. Changes in Your Financial Situation

When you first apply for a home loan, your lender assesses your income, expenses, and credit score. Over time, your financial situation may change—whether through a salary increase, a reduction in other debts, or a change in living expenses. Regularly reviewing your home loan can help you take advantage of these changes.
For instance, if your income has increased significantly, you may be in a position to make higher EMI payments, which can help you repay your loan faster. If your credit score has improved since you took out the loan, you might be able to negotiate for a lower interest rate. Lenders typically offer lower rates to borrowers with higher credit scores, so if your score has improved, it’s worth checking whether you can secure better terms.
Tip: If your financial situation has improved, consider making part prepayments. This will reduce the total interest paid over the life of the loan and enable you to become debt-free sooner.

3. Finding Hidden Fees or Charges

Another benefit of reviewing your home loan is discovering hidden charges. Home loans often come with various fees, some of which may not be immediately apparent when you first take out the loan. These can include prepayment penalties, late payment fees, insurance premiums, and more. Over time, these fees can accumulate, increasing the overall cost of your home loan.
By regularly reviewing your home loan, you may identify hidden or unnecessary fees, such as unused insurance or optional add-ons that you no longer need.
Tip: Review your loan documents regularly to ensure you’re not paying unnecessary fees. If you find any charges that could be waived or reduced, contact your lender and request a change.

4. Home Loan Balance Transfer for Better Terms

A home loan balance transfer allows you to switch your current loan to a new lender offering better terms. This could mean a lower interest rate, a more flexible loan tenure, or improved customer experience.
Saving money by transferring the home loan can be especially beneficial if you’re in the early years of repayment, your credit score has improved, or your financial situation has changed. A home loan balance transfer is also an option if you’re dissatisfied with the services provided by your current lender.
When considering a balance transfer, it’s important to compare different lenders to find the best loan terms that align with your needs.
Tip: Before proceeding with a balance transfer, compare the total costs – including processing fees, prepayment penalties, and other charges – against the potential savings in interest. If the savings outweigh the transfer costs, a home loan balance transfer could be a smart move.

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Conclusion

Regularly reviewing your home loan can help you save money, reduce your interest burden, and make smarter financial decisions. Whether it’s taking advantage of lower interest rates, paying off your loan faster, or identifying hidden fees, periodic assessments can significantly impact the total cost of your home loan.

SMFG Grihashakti offers home loans of up to INR 1 crore* with swift processing and zero hidden costs. With interest rates starting at just 10%* per annum and the flexibility to choose a tenure of up to 30 years*, your repayment journey can remain stress-free. Apply online today or visit your nearest branch for more information.