Home Loan Restructuring vs. Refinancing: Understanding Your Options

Home Loan Restructuring vs. Refinancing: Understanding Your Options

Discover the differences between home loan restructuring and refinancing to make informed financial decisions. Explore competitive interest rates and flexible terms with Bajaj Finance for seamless refinancing solutions.

FPJ Web DeskUpdated: Monday, June 17, 2024, 01:10 PM IST
article-image

Owning a home is often one of the largest financial commitments a person can make, and managing this commitment can sometimes become challenging. Whether due to changes in financial circumstances or a desire to capitalise on better loan terms, homeowners might consider either restructuring their home loan or refinancing it. While both options can provide relief or benefits, they cater to different needs and situations. Understanding the nuances between home loan restructuring and refinancing is crucial for making an informed decision.

Home Loan Restructuring

Home loan restructuring involves modifying the existing loan terms with the same lender to provide relief to the borrower. This process is often initiated when borrowers face financial difficulties, such as job loss, medical emergencies, or economic downturns that impact their ability to make regular payments.

Benefits of Home Loan Restructuring

1. Modification of terms: Restructuring can involve extending the loan tenure, reducing the interest rate, or altering the repayment schedule to lower the monthly instalment amounts.

2. Temporary relief: Often seen as a temporary measure, restructuring aims to provide immediate relief to borrowers struggling with payments, preventing foreclosure and providing time to recover financially.

3. Lender agreement: Since restructuring typically involves changing the terms of the original loan agreement, it requires the lender's approval. Lenders may be willing to restructure loans to avoid the costs and losses associated with defaults and foreclosures.

4. Impact on credit score: Restructuring may have a less severe impact on the borrower's credit score compared to defaults. However, it could still signal financial distress, potentially affecting future borrowing capabilities.

Home Loan Refinancing

Home loan refinancing provides the opportunity to transfer your existing home loan to a new lender of your choice. This strategy can help you secure a more competitive interest rate, reduce your monthly EMIs, and even access a top-up loan in addition to your home loan amount. This option is especially advantageous for those seeking improved terms on their current home loan.

When considering refinancing or home loan balance transfer, it's worth exploring the offers provided by Bajaj Housing Finance. You can benefit from competitive interest rates and flexible tenure options that can be tailored to meet your needs. The home loan schemes come with a range of benefits, including easy balance transfer facility, and top-up loans.

Benefits of Home Loan Refinancing

1. Attractive interest rates: By refinancing your home loan with a new lender, you can negotiate a lower interest rate than your current one, provided your eligibility meets the new lender's criteria.

2. Flexible repayment tenure: Refinancing allows you to modify several terms of your current home loan, including the repayment tenure. You may choose to shorten the tenure or extend it, depending on your financial situation and eligibility, and your new lender can adjust the terms accordingly. Bajaj Housing Finance, you can refinance your home loan with competitive interest rates starting at just 8.70%* per annum.

3. Sizeable top-up facility: Refinancing your home loan can also provide access to an additional top-up loan to cover other expenses not included in your ongoing home loan. This extra amount can be used for home renovation or any other housing-related purposes. With Bajaj Housing Finance, you can Transfer your existing home loan and get a top up loan of Rs. 1 crore* or more.

Choosing Between Restructuring and Refinancing

The decision between restructuring and refinancing depends on the borrower’s specific circumstances and financial goals. If you are experiencing temporary financial difficulties and need immediate relief, restructuring is a viable option. It is particularly useful when the goal is to lower monthly payments in the short term without changing lenders and if your credit score has declined, making restructuring easier to obtain than refinancing.

On the other hand, if current interest rates are significantly lower than your existing loan, refinancing can result in substantial savings. Refinancing is also beneficial if your credit score has improved or you have increased your income, providing better loan terms. Additionally, if you aim to secure a fixed interest rate, reduce the loan term, or access home equity, refinancing is the better choice.

How Can I Refinance My Home Loan?

Refinancing your home loan with Bajaj Finance is a seamless process. To apply for a home loan balance transfer online, follow these steps:

1. Visit the Bajaj Finance website and navigate to the home loan balance transfer page.

2. Click on the ‘APPLY’ button on the page to open the application form.

3. Enter your full name, mobile number, employment type, and the type of loan you wish to apply for.

4. Generate and submit your OTP to verify your phone number.

5. Select your current home loan lender from the drop-down menu and enter your monthly salary and the required loan amount.

6. Provide additional details such as your date of birth, PAN number, email ID, current EMI amount, and other necessary information.

7. Click on the 'SUBMIT' button.

Once your application is received, a Bajaj Finance representative will contact you to guide you through the next steps of your application journey.

Refinancing your home loan can provide significant financial benefits and improve your overall loan terms. By partnering with Bajaj Housing Finance, you can ensure a seamless process and access competitive loan options tailored to your needs.

RECENT STORIES

Karnataka To Add 2% Cess On Movie Tickets & OTT Subscriptions To Cover Welfare Cost For Cine Workers

Karnataka To Add 2% Cess On Movie Tickets & OTT Subscriptions To Cover Welfare Cost For Cine Workers

Microsoft & Crowdstrike Stocks Spiral Down On Wall Street After Blue Screen Glitch Affects Global...

Microsoft & Crowdstrike Stocks Spiral Down On Wall Street After Blue Screen Glitch Affects Global...

Trump indicates A Tough Policy Against China And Russia

Trump indicates A Tough Policy Against China And Russia

Getting A Grip On Inflation Dynamics

Getting A Grip On Inflation Dynamics

Global IT Crisis July 19: Flawed CrowdStrike Update Causes Widespread Disruptions In Microsoft...

Global IT Crisis July 19: Flawed CrowdStrike Update Causes Widespread Disruptions In Microsoft...