If you have a house, you can listen to everyone from neighbours to major news reporters often talking about refinancing. So do you also need to consider this? In many cases refinancing your mortgage may be right for you. Let’s see some of the main reasons:
Do you want to get a better rate?
If your credit rating has increased significantly, you can refinance and get better interest rates. For example, raising the credit rating by 20 points based on loan details lowers the interest rate and saves thousands of dollars over the lifetime of the loan.
Do you want to pay off a Loan Faster?
In some cases, it may be helpful to change the loan period during refinancing. If you can pay higher monthly payments for higher income, you will pay more quickly and refinance to a shorter loan (e.g. 30 to 15 fixed years) to save thousands of dollars in interest payment during the loan period.
Do you want to improve the terms of your loan?
Did you worry about how many years your mortgage was awarded to you? If so, short term refinancing may be the answer. In some cases, if the current rate is high, monthly payments may be the same in a short period of time; however, payment years will decrease. Monthly payments may not be reduced, but the total amount of interest paid will decrease.
Do you want to consolidate your Debt?
Short-term borrowings such as credit cards have higher interest rates than mortgage loans. If you are in debt of this sort, it may be time to turn into a refinance for debt consolidation. As long as there is enough availability of home equity, this refinancing is possible. Consolidating your debt can save you from multiple monthly payments and can provide significant monthly savings in interest.
Do you want to rebuild or renovate?
You can also make a cash-out refinance and borrow money at a low interest rate using the equity of your house. People often invest this money in renovation to improve and raise the value of their home.
Do you want to invest in property or shares?
Many people refinance the purchase of investment properties to take advantage of the profitability of the lease and potential capital gains that help the borrowers either pay the mortgage or use funds for other options such as the stock market. Buying property investments can be a good strategy, but it is difficult to create the fund for the deposit and the associated holding cost especially if you are already paying off for a mortgage.
Do you want to want to take that dream holiday?
Although vacation funding is not the most traditional incentive for mortgage refinancing, some borrowers consider refinancing at lower interest rates to facilitate their holiday costs. If you are going to pay for your vacation with a personal loan, you can refinance your mortgage at a lower interest rate, and you can use your savings to cover your travel expenses. However, this needs to be carefully considered because if there is no plan on how you will repay your holiday debt after it has been added to your mortgage can increase your interest and repayment.
At Finmor, we have refinancing experts who can help you determine the break-even point and how much you can save by refinancing. Once you meet our Nepali mortgage broker Mr. Anil, he will evaluate the loan to show a breakdown of all costs associated with your refinancing depending on the relevant loan option you are thinking.
We are happy to help you through your journey of refinancing options and finding the right one for you. You can arrange a call with Anil to start your walk through the refinance journey.
