Getting The Most Out Of Refinancing Your Loan
If you think a mortgage is a “set and forget” type of deal, think again!
If you’re thinking of refinancing, there are many things to consider before committing to a fresh loan. But first, let’s take a look at your old loan!
If it’s lower than the current market rate, you might not want to lose it and end up paying more.
You might benefit more from an adjustable rate mortgage (ARM) sooner.
Can you afford to keep paying the same amount each month?
Are you coming up to the final due date? Do you want to extend your payments in exchange for smaller monthly dues?
Having extra income from a partner or an inheritance might mean you can increase your monthly payments, but having children may mean you’d prefer to lower them.
A higher or lower paying job can affect your ability to pay your amortisations. A sudden illness, disability, or job loss can happen to anybody, so factor in these risks as well.
Any of these choices can affect which new loan you choose.
Think about how interest rates have changed in the recent past, and what is predicted for the future. The most common reason why people choose to refinance is the opportunity to secure a better interest rate. As interest rates change (and as the latest global pandemic shows they can drop dramatically!) borrowers can potentially save big with lower interest rates, lower monthly payments, or a different loan repayment period.
Because all home loans have different amounts of fees, even if they’re lending the same amount. Compare the features too – some are handy, but don’t end up paying for features you will not use.
If you are thinking of going to a new bank, find their application fees and other caveats – some banks require you to open a bank account with them in order to receive and pay back the loan, which you may not wish to do.
In working out your loan affordability, factor in potential further rate increases so that you are prepared for increases to your minimum repayment amount in the future.
Adding other debts will affect the monthly payable amount, but might save you money on interest. This financial management strategy is very common if you have several loans from different banks and run the risk of losing track of your payments, therefore paying more in the long run from missed payments or late fees. Putting all your various debts into one easy loan makes your finances more manageable.
As you can see, there is much that you need to consider before refinancing. You are the expert in your own finances! If you need assistance, speak to a financial expert or mortgage broker for advice.
If you think a mortgage is a “set and forget” type of deal, think again!
If you’re thinking of refinancing, there are many things to consider before committing to a fresh loan.
A refinancing loan is a type of loan that replaces your current home loan with a new one that has more desirable terms for you.
There are many myths about refinancing, but there’s no reason to believe any of them.
If you think a mortgage is a “set and forget” type of deal, think again!
If you’re thinking of refinancing, there are many things to consider before committing to a fresh loan.
A refinancing loan is a type of loan that replaces your current home loan with a new one that has more desirable terms for you.
There are many myths about refinancing, but there’s no reason to believe any of them.
*This information is general in nature and has been prepared without taking your objectives, needs and overall financial situation into account. For this reason, you should consider the appropriateness of the information and if necessary, seek appropriate professional advice. Interest rates displayed are dependent on qualifying for a home loan with your chosen Bank. We cannot guarantee clients will avail the advertised rate.
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