Refinancing your home loan can come with better interest rates, lower fees and could also help you make payments easier. Lenders have diversified the loan options, thus you can get even a variable rate at the price of a fixed one.
An appointment with a new lender will reveal how much you can borrow according to your income and most importantly, calculate all the charges, fees and conditions that come with the package. This includes the overall loan plus interest you’re going to have to pay until the end of the loan and also include the entry fee, exit fee, refinancing costs and extra charges.
Reasons for refinancing your home loan
Consolidating debts, renovations that are not included in your current deal or adding something new to the house are some of the reasons for which you can refinance your home loan.
Bad credit history or problems, keeping up with the mortgage are also common reasons that determine borrowers to search for a better deal.
Wanting to switch from a fixed rate to a variable rate might influence your decision especially if your financial status has changed over the last couple of years.
Income changes can threaten the stability of your finances, so refinancing could offer some help in dealing with monthly payments.
The need for a larger loan to cover other expenses you’re about to make.
Today’s market offers a variety of refinancing options, so with some research and documentation, the chances are that you’re going to find a better deal, increase your savings and get out of debt faster.
The steps you’re going to have to take
Refinancing your home loan starts with an analysis of your lifestyle and wage. These two are the starting point of any loan. The lender will take them into consideration and come up with a personalised report. This will give you a clearer picture of how much you can borrow so that you can afford the monthly payments.
Nowadays you can just complete an enquiry on the website to have a better idea about the best loan you can take. If you submit the application, a lender will contact you in a short time and discuss with you more thoroughly about the details and implications of refinancing your home loan.
Making the right decision
- Check with your current lender first to see if he’s not willing to offer you a better deal
- Calculate that the refinancing costs will pay off in the next two years
- Keep your current features besides adding new ones
- Save money overall, and not just making smaller payments with higher interest rates and fees
- Look into your credit history before contacting a lender for refinancing
- Make sure that by refinancing your home loan, you’ll have more options, such as consolidating debts or renovations to your home
- Choose a loan that will raise the loan value with more than 80% of the property’s value, which will oblige you to take on an exorbitant lenders mortgage insurance
Refinancing your home loan starts with discussing your problems with your current lender. Being no longer satisfied with the conditions you currently have to meet could make them offer you some adjustments that will reduce the payments.