If you’ve had the same home loan for several years now, the chances are that you may need to make some changes to it. Regardless if it’s for better or for worse, your financial situation may have changed in the meantime. Whether you can no longer pay you loans or you simply want to make them more convenient for you, the market today makes it much easier for home loan refinancing.
Choosing to Refinance
Even if you do not necessarily do it with the intention of refinancing, you may want to keep an eye on your payments and review your progress. Make sure that your current loan is still the best that you could go for and that it has every feature you may need.
Once some time has passed, you may want to start comparing home loans. If you find one that seems to suit your needs more, then you may want to refinance. Basically, with home loan refinancing, it means that you are paying off the old loan with a new one.
The right loan may even shorten the term of the loan and reduce the repayments, getting you out of debt sooner than anticipated.
When Should I Go for Refinancing?
There are several circumstances when home loan refinancing may look like the best way out. Here are just some of them.
- The home loan you have your eyes on has a better interest rate or some new features that will make your payments much easier to manage (such as a flexible payment feature).
- You may want to pull out your home equity and use it to renovate.
- You’re nearing the last mile of a fixed rate term. In this case, it might be a good idea to go for a flexible home loan or a more attractive interest rate.
- You are trying to consolidate your debts (car loan, credit card) into your mortgage so that you have only one monthly payment to make. In this case, home loan refinancing may make things much easier to manage.
If you decide to refinance your home, you might even have potential tax benefits. That usually happens if you access your equity and choose to invest those funds in the property.
Things to Keep in Mind with Home Loan Refinancing
Every home loan switch comes with its own taxes. For example, if you want to get out of a loan early, you may have to pay some “penalty” fees. These can be exit charges and fees, loan services, mortgage registration fees, loan establishment fees or settlement costs.
Some home loan refinancing options may even ask you to settle for insurance if you decide to take out more than 80% of the value of the property. Make sure that you know everything before taking out the new loan.
If you don’t necessarily feel the need to refinance your home, you may want to leave it just the way it is, to avoid any taxes. On the other hand, if you meet any situations mentioned above, then home loan refinancing may be a gift sent from the heavens.
If you want to know more about refinancing and how we can help you, click here to find out.