When RBI reduces the repo rate, all your loans also become cheaper. After the repo rate was reduced twice, banks have started reducing the interest rates of everything from home loans to personal loans. However, after the interest rates of the loan have decreased if you feel that your home loan is expensive, then you have a solid way by which you can take your home loan or personal loan with very cheap interest rates and save lakhs of rupees of interest.

If you feel that you pay EMI on time and your CIBIL score is also good, then you should first talk to the bank to improve the interest rates of your loan. If the bank does not agree to this, then you can resort to loan refinancing and get the interest of your loan reduced.

In loan refinancing, a new loan is taken with terms like low interest rate and the old loan is closed. After this, repayment of the new loan is started. If your credit score is good, then other banks easily offer you a cheaper loan than the current interest rate.

The advantage of refinancing is that as soon as your interest rate decreases, your EMI also decreases. This gives you a lot of relief.

When you get loan refinancing done, you get the opportunity of loan restructuring. While taking a new loan, you can reduce or increase the tenure of the EMI according to your convenience. If you take a loan with a cheap interest rate and also get the tenure reduced, then you can save lakhs of rupees in interest.

If you are getting a new loan at a cheaper rate in another bank, then you can take this decision. Apart from this, if you have taken a loan at a fixed interest rate, but after some time the interest rates have started falling. You want to adopt the new interest rates, but your bank is not ready to give you the option of a floating rate loan in this situation, then you can get the loan refinancing done. If the burden of EMI is too much on you and you want to reduce the EMI by restructuring again, then you can take this decision.

Whenever you make this decision, you may have to pay foreclosure fees, etc. in the existing bank. Apart from this, you may have to pay loan processing fees and other fees along with stamp duty in the new bank.