A quick guide to refinancing your home loan
You wouldn’t buy a pair of shoes that don’t fit – so why would you get a mortgage that doesn’t fit? Property is a long-term investment, and you need a home loan that reflects your goals and lifestyle to a T. Just as you grow out of a pair of shoes, you couldn’t grow out of a certain type of mortgage – that’s where refinancing could save the day.
What is refinancing?
Refinancing is a method through which you pay off your existing loan with a new one. Primarily this is done to secure a better deal. Generally, this is done in order to secure a better interest rate, this could also make your regular repayments lower as well as provide you with the ability to shorten or lengthen your loan term.
It should be noted that in many cases you may be required to pay fees on your existing loan when refinancing. Additionally, there may be establishment fees on your new loan. Before you decide on refinancing, you should make sure the potential benefits to you outweigh the cost of finishing one loan and beginning another.
What are the benefits?
One benefit of refinancing a home loan is that you might secure a better interest rate. Generally, you need to be a couple of years into your existing loan before you can refinance. Since there are some pretty competitive interest rates in the loan market at the moment, you could very well get a better rate than you are currently on.
You would also have the option to move to a fixed rate from a variable, or vice versa. If one particular loan type is preferable to your current situation, refinancing could be a great way to make this adjustment.
When refinancing, you could potentially borrow slightly more by using the equity you’ve already built up in your home. This could be used to undertake renovations on your house, or even purchase an additional property.
Where do you sign up?