What You Should Know About Refinancing an Investment Property
Refinancing an investment property is up for debate when you’re no longer satisfied with the rates or want a better customer service.
When you’re short on finances, and you can’t afford to keep making the same payments month after month, you start thinking about switching lenders, so you’ll have more flexibility, smaller rates, and lower fees. Having assistance is always important, so look for a bank that offers this type of support as well.
This is not a decision to be taken lightly because even though most of us want a better deal, not all borrowers get it. Uncertain times make people look for security and even though lenders are more than happy to offer you a great solution, changing banks is not always the right call to make.
Things to look for when refinancing an investment property
- The changing costs of the loan
Different lenders come with different advantages and disadvantages. The changing costs of the loan and its life are the main concerns when refinancing an investment property.
- Fees and charges
There’s a whole variety of taxes that could turn a better deal into a poorer one, like entry fee, exit fee, application fee, legal fee, stamp duty fee or valuation fee. Each one of them has to be considered carefully before changing lenders. Ongoing charges will significantly impact financial obligations.
- Flexibility and rates
A fixed rate or a variable rate might come with different fees as well, so choose carefully and discover what’s the best choice for you. Interest rates could go higher if you’re looking for a variable rate that will offer some flexibility with payments. They can also decrease if they’re affected by other external factors.
- Assistance and communication
The process of changing lenders requires a lot of support and a good communication between yourself and the lender. If you start feeling like the lender doesn’t invest too much time and effort in your problems now, just think about how is going to be when other problems appear.
- Income and family security
The rates you’re paying might suit your current income, but you must also take into consideration the stability of your income. If the situation changes, will you be able to afford the payment then?
It’s simpler to pay a loan on two wages than doing it on a single income. So, your family’s financial stability should also be a thing to consider when refinancing an investment property.
Talk to your lender before looking somewhere else
Sometimes, lenders will change the fees or offer other benefits if you stick with them. Especially if you’ve made the payments on time and proved to be a reliable borrower, your current lender might consider making changes, rather than letting you move your loan to another company.
When refinancing an investment property, start by making a list of the things that bother you at your current loan. Keep in mind that each lender offers a combination of advantages and disadvantages, so go with the one that solves your current problems, instead of looking everywhere for a general refinancing solution.