Owning a home is a milestone achievement, but managing a home loan requires ongoing attention.

By periodically assessing your home loan, you can uncover opportunities for savings and ensure that it stays aligned with your financial goals.

But how often should you review your home loan, and exactly what benefits can it bring?

Let’s explore why a home loan review is essential and how it can help you optimise your finances in the long run.

Why You Should Review Your Home Loan Periodically

Regularly reviewing your home loan is a smart financial strategy that helps you adapt to changing market conditions such as fluctuating interest rates, optimise loan features, and align your borrowing with changing financial goals.
Additionally, a home loan review ensures that you are making the most of features like balance transfers and prepayment options, which can help reduce your debt burden.
As your financial situation evolves – whether through salary increments, lifestyle changes, or new financial commitments – revisiting your loan terms allows you to stay in control and maximise potential savings.

Home Loan Health Check

Just as regular health check-ups keep you physically fit, a home loan health check ensures that your loan remains financially sound and beneficial. Here are the key elements you should assess during a home loan health check:

• Your current interest rate against the prevailing market rates
• EMIs and their manageability
• Opportunities for prepayment
• Any hidden fees and charges
• The remaining loan tenure

Regularly reviewing these factors helps ensure you're not overpaying and that your loan terms remain competitive and favourable.

Why and How Often Should You Review Your Home Loan?

Why Review Your Home Loan?

Here are the key reasons you should periodically assess your home loan:
1. Interest Rates and Opportunities for Balance Transfer
If market interest rates have declined since you took out your loan and another lender offers a lower rate, transferring your loan could help you save significantly on interest payments. Even a slight rate reduction can result in substantial savings over the loan tenure.
A home loan balance transfer can also help you secure more favourable terms, such as an extended tenure and better customer service, particularly if you’re dissatisfied with your current lender.
Before opting for a balance transfer, evaluate the total costs, including processing fees, prepayment penalties, and other charges, against the potential interest savings. If the savings exceed the transfer costs, switching your home loan could be a financially beneficial decision.
2. Adapting to Life Changes
If you receive a salary hike, you may consider increasing your EMI to shorten the loan tenure and reduce overall interest costs or making prepayments (keeping in mind potential prepayment penalties for fixed-rate loans). Periodic reviews help ensure your loan aligns with your evolving financial goals and budget.
3. Discover Hidden or Unnecessary Fees
Home loans typically include various fees, such as prepayment penalties and insurance premiums, some of which may not be immediately noticeable when you first secure the loan.
Over time, these costs can add up, increasing the overall loan cost. By reviewing your home loan regularly, you can identify hidden or avoidable fees, such as unused insurance or optional add-ons that are no longer necessary.

How Often Should You Review Your Home Loan?

• Annually: Conducting an annual review is a practical approach to assessing your loan against current market trends and your financial status.
• After Major Financial Changes: Life events such as a job change, salary increase, or significant expenses are good triggers for a loan review. These events can impact your repayment capacity and financial goals, making it necessary to reassess your loan.
• During Market Rate Changes: If market interest rates drop significantly, it’s worth reviewing your loan to explore options like transferring to a lender with a lower rate.

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Conclusion

A regular home loan review can lead to substantial savings, enhanced financial control, and better alignment with your goals.

At SMFG Grihashakti, we are committed to helping you achieve your homeownership dreams. We offer home loans of up to INR 1 crore* at attractive interest rates starting from 10%* per annum. Check your home loan eligibility and apply online today!