A home loan is a long term engagement, and cannot be taken lightly by any means. Most home loans last for a period of fifteen to twenty years, and a lot can happen during this time. Your home loan should be reviewed quite regularly since the future is always uncertain and you should know how the status of your loan is progressing. You loan and your needs should be well-aligned with each other, irrespective of how your financial situation changes during the time.
A number of things can affect your financial situation- the status of your job, changing government policies, changes in rates of interest, the economic situation of your country and so on. This is why you should always be updated regarding the outstanding amount on your home loan, so that you can take a decision regarding what your home loan would require- a balance transfer, top-up or foreclosure. Therefore, ideally, it is advised to review your home loan every four to five years.
- Balance transfer:
This is a common method followed by many people with outstanding home loans. Over the years, it may be possible that you find financiers who provide better interest rates and more attractive options than your initial financier. In this situation, you can always transfer the loan from one agency to another, provided you have a history of timely payments and a good credit score. You simply need to submit some documents and a no-objection certificate along with your payment history to the new agency to enjoy the new benefits.
As the name suggests, this implies an earlier closure of your outstanding amount or paying a significant part to lower the EMI. This can be a good option of your financial condition improves in a stable way, and then you would no longer need to worry about the status of your home loan. You would need to submit the required documents along with an application for part payment or foreclosure, and of course, the loan sanctions paper. Once you close a home loan, always remember to take the original property papers from the financier.
As the name suggests, this essentially denotes an additional amount that can be availed in case the previous loan does not cover all your requirements. To avail the top-up loan facility, you would need to submit the required documents along with proof of income and employment and all the previous chain documents. Since this is a personal loan, the interest charged is usually higher than your earlier home loan.
When you review your home loan status periodically, you are up-to-date on how you should proceed with paying the outstanding amount depending on your present financial situation. You can then choose from among the options mentioned above and make your decision.