1. Save on Interest
Why refinance? Well more often than not, it’s to save money on interest.
Interest rate is often the number one reason borrowers refinance. Particularly these days, because many of us are highly leveraged in terms of the amount we owe. If this is the only reason you are looking to refinance then it’s a good idea to approach your current lender to see if there is anything they can do to help, it may save you time and energy. Identifying a better rate will come from research in the market. But remember this is only part of the equation. You may have the lowest rate in the market, but if the rest of the package is costly or inflexible, it may not be best deal for you.
Interest rate is the main reason of Refinance. It may save your Money, Time and Energy.
Getting a better overall deal. Getting the right home loan to help you achieve your goal should be a priority. But first you need to set those goals and match the loan to help you reach them.
Apart from interest rate, some other things you may need to consider include: – Low Fees: low or no monthly or annual fees.
- Loan Features: The right features. Some loans come with redraw, offset account, line of credit and online access. Depending on how you operate your loan and indeed the purpose, would determine what features you need.
- Flexibility: The right amount of flexibility. Well additional and lumpsum repayments are a must for any variable loan arrangement. Access to move to a fixed rate or interest only payment option can also be useful.
Other reasons to refinance can include preparing for immediate or future projects. For example: Home Renovations
Renovating your home, it’s common practice to combine the need for additional funds to renovate your home with the renovation of your home loan.
Creating wealth through investment property. Accessing the equity in your home to purchase an investment property can be a great way to build wealth over the longer term. If this is part of your financial future, it’s important to structure your new loan arrangement effectively and efficiently.
Changing circumstances. Whole life is full of change. For
2. Consolidating Your Debt
Consolidating your debt. When credit cards, car loans or personal loans get out of hand, consolidating all debts into your home loan can help you pay those debts off sooner. However, rolling short term debt into long term debt can mean you pay more over time. So make sure you structure your repayments appropriately to maximize the benefit and remember don’t fall into the trap of letting short term debt get out of control all over again.
Quality service and guidance. A quality lending professional can make all the difference when it comes to saving you money on interest and paying that loan off sooner. Look for a lender you can have an ongoing relationship with. One who will look for ways to structure your finances according to your goals and provide you with strategies to achieve them.
Exit Fees: But before you do anything relating to refinancing, you need to understand whether there will be any costs involved in exiting your current loan arrangement. This cost will be determined by how long you have had your current loan and the type of facility you have. So please ask that question first.
Establishment Fees: There will also be costs involved in establishing the new loan and these could vary from lender to lender.
Whatever you do, remember that when choosing your next home loan, you need to ensure it ticks all the boxes in relation to interest rate, fees, flexibility and of course service. Don’t work hard for your home loan. Let your new lender and your new loan do the work for you.
Posted on: October 27, 2018, By: Laxmi - LHL