Why is it Crucial to Review Your Home Loan Periodically?

Buying a home is everyone’s dream, and a home loan is the perfect means to the end. However, a person may become complacent once the loan is sanctioned, and the monthly deductions are running smoothly. But being unworried can hurt sometimes. A home loan is a long-term commitment (10-15 years), during which there can be several alterations. As financial prudence, it is important to review the home loan account periodically to make most of the opportunities.

During the loan course, the market may experience significant changes such as new players, lower interest rates, enhanced services, special offers, new home loan products by the existing lender, etc. Also, the RBI can alter interest rates, impacting the borrower. Hence, it is very critical to review the home loan to assess the market for better opportunities. In case the borrower wants to transfer the home loan amount to another bank or financial institution, a few requirements need to be fulfilled:

• Ideal EMI payment record and credit score
• Balance transfer request along with KYC
• Income and employment proof
• Loan documents
• NOC from the bank
• Foreclosure letter along with payment history

A borrower can experience positive monetary changes such as a promotion, increase in salary, new income sources, reduced expenses, bonus, etc. This will leave more money with the borrower, allowing him/her to consider paying the outstanding home loan amount fully or partly before the fixed tenure. This is known as foreclosure of loan and banks may charge a fee for this privilege. The below documents should be submitted for a foreclosure:

• Written application
• ID and Address proof
• Loan papers

Reviewing home loan helps the borrower assess financial requirements and determine if the current amount is enough to meet the expenses. In case of shortage, the borrower can apply for a top-up loan, which is a type of personal loan taken over existing debt, from the same bank or another. The interest charged in a top-up loan is generally higher than the home credit. The following documents should be submitted for a top-up facility:

• Request form with KYC
• PAN
• Identity and address proof
• Income and employment evidence
• Loan documents

In case of multiple debts, consolidation of the loans into the existing home loan can help save on the interest and simplify payments.A consistent check on the home loan account helps the borrower to stay updated, grab better opportunities and flex the loan terms per his circumstances.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.