After you have availed a mortgage loan or a loan against property, you may think that you are paying a higher rate of interest on it. Hence, you may be willing to switch your existing mortgage loan to a lender offering a lower rate to pay lower EMIs. 

If you are stuck in a similar situation, then here is a post that will let you know more about the mortgage loan or loan against property refinancing. Read on!

What Is Mortgage Loan Refinancing?

Availing a new mortgage loan to replace the ongoing on original one is known as the refinancing. It is done to enable a borrower to acquire a better and lower interest rate and terms from a new lender. Under the facility, the first loan is paid, the second one is created, instead of a new loan altogether and keeping out the original mortgage. 

For borrowers who have maintained a robust Credit Score, repayment and employment history, it is a good way to get a variable loan to get fixed and get a lower rate. 

Most of the people opt for a loan against property refinance when they have equity on their home. It is nothing but the difference between the money owed to the mortgage company and the home’s worth or market value.

What Are The Benefits Of Applying For A Mortgage Loan Refinancing?

The biggest advantage of applying for the refinancing of an existing mortgage loan irrespective of the equity is reducing the overall interest rate. As people continue to work, earn money, keep paying bills and thus, increase their CIBIL Scores. The increase in their CIBIL Scores helps them avail of a lower mortgage loan interest rates later. 

Needless to say, a lower interest rate on the mortgage loan could have a reflective outcome on monthly outlays, helping borrowers to save huge money per year. 

Also, a large number of borrowers opt for a loan against property refinance because they want to acquire money for bigger purchases such as cars. Some also do for lessening their credit card debt. They do this is by refinancing for the intention of taking the equity of the house. 

A Word Of Caution Before Going For Mortgage Loan Refinance 

Overall, the advantage of refinancing a mortgage loan is when is able to save on EMI amount that you are paying per month. Use mortgage loan calculator for calculating the exact EMI amount. What’s more, there are also some processing charges that your existing lender will levy for mortgage loan refinancing. 

Hence, you should ensure to check if the processing charges are more than what you will save on EMI while refinancing the loan. If the processing fee is more than what you will save on opting for the refinance, then you should not go for it.  

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