How to Refinance Your Home Loan for Better Terms
Disclaimer: This blog is generic in nature. For home loan refinancing or balance transfer-related queries, please contact Ujjivan Small Finance Bank.
July 05, 2025

Owning a home is a dream shared by many, but managing the financial aspects of it can be overwhelming. One of the biggest financial commitments is a home loan, and finding ways to make it more manageable is essential.
In this article, we will explore the Home Loan refinancing process , and suggest how you could refinance home loan? By understanding the refinancing process and utilising the available options, you can potentially lower your monthly payments, reduce the interest rate, or even shorten the loan tenure. This would result in loan savings over the long-term.
Key Steps to Refinance Your Home Loan
When you refinance a home loan it implies taking a new loan to pay off the existing one. This allows borrowers to replace their current loan with one that offers better terms, such as lower interest rates or reduced monthly payments. Here are key steps involved:
1. Assess Your Financial Situation
Before you start the refinancing process, it's important to know your current financial situation. You must take into account factors like income stability, credit score, and debt-to-income ratio. Lenders typically evaluate these factors before approving a refinance application. If your financial health has improved since you initially took out the loan, you may be eligible for better terms.
2. Research Lenders and Loan Options
Once you've assessed your financial situation, research different lenders and loan options available in the market. Compare interest rates, loan terms, and fees associated with each option. This will help you identify potential lenders who offer favorable terms.
3. Gather Documents
When refinancing your home loan, you will need to provide documents such as income proof, bank statements, and property documents to the lender.
4. Apply for the Refinancing
Once you've selected a lender and gathered all the required documents, it's time to apply for the refinancing. Fill the application form and send it along with the necessary supporting documents. The lender will then review your application and assess your eligibility for refinancing.
5. Loan Approval and Closing
Once approved, carefully review the terms and conditions of the new loan before accepting it. Once you accept the offer, the closing process begins, where you sign the necessary paperwork to
Potential Benefits When You Refinance Home Loan
If you look to refinance home loan, the same offers several potential benefits that can improve your financial situation. Let's explore some of these benefits:
1. Lower Interest Rates
One of the primary reasons people refinance their home loans is to take advantage of If interest rates have dropped since you initially took out your loan or if you've improved your credit score, refinancing can help you secure a lower interest rate. This can result in significant savings over the life of your loan.
2. Reduced Monthly Payments
Refinancing can also lead to reduced monthly payments by extending the loan term or securing a lower interest rate. Lower monthly payments can provide much-needed breathing room in your budget and free up cash for other expenses or investments.
3. Shorter Loan Tenure
On the other hand, if you are in a better financial position and can afford higher monthly payments, refinancing can help you shorten the loan tenure. By opting for a shorter loan term, you can become debt-free faster and save on interest payments in the long run.
Realistic Scenario: Saving on Interest Payments
Let's consider a scenario where you have a home loan of ₹75 lakh with an interest rate of 8.5% and a remaining tenure of 25 years. After four years of repayment, you realise that interest rates have dropped significantly. By refinancing to a new loan with an interest rate of 7%, you can save on interest payments.
Table: Interest Payments Comparison
Loan Parameters | Existing Loan | Refinanced Loan |
Loan Amount | ₹75 lakh | ₹75 lakh |
Interest Rate | 8.5% | 7% |
Tenure | 25 years | 21 years |
Total Interest | ₹1,40,90,269 | ₹1,15,40,479 |
Savings | - | ₹25,49,790 |
By refinancing in this scenario, you can potentially save ₹25,49,790 on interest payments over the remaining tenure.
Final Thoughts
Refinancing your home loan can ultimately result in loan savings. By understanding the refinancing process, exploring different options, and assessing your financial situation, you can make an informed decision about refinancing your loan.
Disclaimer:
The contents herein are only for informational purposes and generic in nature. The content does not amount to an offer, invitation or solicitation of any kind to buy or sell, and are not intended to create any legal rights or obligations. This information is subject to updation, completion, amendment and verification without notice. The contents herein are also subject to other product-specific terms and conditions, as well as any applicable third-party terms and conditions, for which Ujjivan Small Finance Bank assumes no responsibility or liability.
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FAQs
1. How can refinancing result in loan savings?
Refinancing can save money by securing a lower interest rate, reducing monthly payments, or shortening the loan tenure. This results in loan savings over a period of time.
2. Can I refinance home loan multiple times?
Yes, it is possible to refinance home loan multiple times if it benefits your financial situation.
3. What documents are required for refinancing a home loan?
The required documents may vary depending on the lender, but generally, you will need income proof, bank statements, property documents, and identification proof.
4. Is it necessary to have a good credit score to refinance home loan?
While having a good credit score increases your chances of getting approved for refinancing, there are lenders who offer options for individuals with lower credit scores.
5. Can I refinance my home loan if I am self-employed?
Yes, self-employed individuals can refinance their home loans by providing income proof such as tax returns and audited financial statements.
6. Will refinancing my home loan affect my credit score?
Applying for refinancing may result in a temporary decrease in your credit score due to inquiries and new credit accounts. However, responsible management of the new loan can help improve your credit score over time.
7. Can refinancing be done for a home loan with a joint ownership?
Yes, refinancing is possible for home loans with joint ownership. All co-owners will need to be involved in the refinancing process.
8. Can I change the tenure of my home loan when refinancing?
Yes, refinancing allows you to adjust the tenure of your home loan based on your financial goals and repayment capacity.
9. How long does it take to complete the refinancing process?
The time required to complete the refinancing process may vary depending on factors such as the lender's process, documentation requirements, and property valuation. On average, it can take anywhere from a few weeks to a couple of months.
10. Can I refinance my home loan if I have an adjustable-rate mortgage (ARM)?
Yes, you can refinance an ARM to switch to a fixed-rate mortgage if it aligns with your financial goals and stability preferences.
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