Refinancing your mortgage is a big decision, which should always be carefully scrutinised. Although this may often seem like the perfect prospect for your situation, as with any other decision, some ins and outs should be factored in.
Without further anticipation, let’s have a look at the most commonly met questions regarding mortgage refinancing, and how to save money by choosing this option.
Choosing Mortgage Refinancing and Saving Money – A Possibility
Similar to all financial decisions you’ll take, a general thumb rule you shouldn’t omit is doing research. Also, discussing your situation with your current lender should be a preliminary step. We advise you to do so because your current lender may provide you with a decent offer.
Unfortunately, this isn’t always the case. To ensure that you don’t end up making a decision that will cost you money, in the long term, you should consider talking with a financial specialist, before making a call.
Asking quotes from distinct lenders is also worthwhile. Nonetheless, be wary of lenders that promise something that is too good to be true. Most of the times, what they do offer is, indeed, too good to be true, and the mortgage refinancing solution they provide is linked to hidden costs.
On that note, we advise you to examine the loan terms carefully. Instead of the interest rate, which is often the first (and only thing) that lenders take into account, consider the variability of the loan, whether you can pay it back quicker without facing further penalties, extra closing costs, so on and so forth.
Always Make Preliminary Calculations
Before shopping around for mortgage refinancing, we find it compulsory to get acquainted with the exit fees, ongoing costs, loan terms and, of course, the interest rate. Your focus should be placed on balancing the overall costs of switching loans in contrast with the amount of money you’ll be saving.
Determine Your Individual Requirements
Every person requires a distinct mortgage refinancing solution. In other words, there is no all-time refinancing option that will fit the needs of every borrower. Once you get this clear, you should analyse the loan solution beyond its interest rate. Although looking for low-interest rates isn’t bad per say, it is not everything.
Think about this: what features should the loan have so that you can accomplish your financial goals sooner? Loans have hidden fees attached, which often go unmentioned. Having a financial consultant can aid you to fully comprehend the loan terms before you sign a contract. You could save money by eliminating some of the features you don’t plan to use.
Be Open to Negotiating
Whether you’re discussing with your current lender or you’re thinking of changing your lender for a better deal, always be open to negotiating. This can aid you to obtain a sweeter mortgage refinancing option.
Weighing the Pros and Cons
If you want to go for it, and choose another lender, make sure you carefully examine the pros and cons. Loan costs, features – portability, terms, interest rates, type of loan, redraw and offset costs, lender service, your lifestyle and your financial properties are some of the aspects you should factor in to make an excellent choice.