When is the right time to opt for a home loan refinance?
Usually most people opt for home loan refinance when their interest rate is way too higher than the existing rate of interest. So you may be either be changing from one bank to another or switching from fixed to floating. Home loan is a long term product with a long tenure. There are bound to be interest rate fluctuations along the way. Unless the interest rates drop more than 0.75 to 1% from your prevailing interest rate, even considering a home loan refinance is a big no.
Since Home Loans run for long periods of time, there is bound to be a fluctuation in their interest rate. People opt for Home Loan refinancing when the trending interest rate is much lower than the rate they are paying on their Home Loan.
You can opt for Home Loan refinancing if there is at least 1 percent difference in the interest rate. You can choose to refinance your loan by moving it to a new bank or by switching from a fixed interest rate to a floating rate of interest.
If there is little change in the interest rate, then refinancing your Home Loan may result in an expense as you’ll end-up paying more in refinancing charges than the actual benefit accrued.