LoansFinancial Glossary
Refinancing
Definition
Transferring an existing loan from one lender to another to benefit from a lower interest rate, better terms, or improved service. In India, home loan balance transfer is common — banks often offer 0.25-0.75% lower rates to attract customers from competitors, along with waived processing fees.
Why It Matters
A 0.5% interest rate reduction on a Rs 40 lakh home loan with 15 years remaining saves approximately Rs 4.5 lakh in total interest. The cost of refinancing (processing fee of Rs 10-20,000 plus property valuation fee) is typically recovered within a few months through lower EMIs.