5 Good Reasons to Refinance
Your mortgage is most likely the largest investment you will make, so it’s a good idea to constantly assess and reassess your home loan to see if you are getting the maximum benefits from it. By refinancing you are able to keep your mortgage up to date with the current market.
There are many reasons why we decide to refinance our homes and there are many ways that it can benefit us by refinancing our existing mortgages. There are often confusion surrounding refinancing of your mortgage, it is important to first explain that refinancing is actually closing out your current mortgage and financing your home with a new mortgage.
With this being said, keep in mind that refinancing a home can be a lot of work and could also involve the same cost as when you first took out your mortgage. On the other hand, it can provide you with a valuable opportunity to save money, access improved loan features, consolidate debt or tap into your home’s equity. Refinancing can result in significant savings depending on the circumstances and reasons involved, therefore your decision to refinance or not will ultimately depend on your particular circumstances. Here are 5 of the most common reasons why people choose to refinance their homes. 1. Tap into your home’s equity.
Refinancing your home loan can be a great way to access you’re your home’s equity, this cash can then be used to invest into another property or even renovations for the existing home.
2. Lower interest charges.
If you haven’t refinanced in a few years, the chances are your interest rate would be higher than today’s rates. By refinancing your home loan and reducing the interest rate you will not only reduce the interest charged but also reduce the monthly repayment. 3. Reducing the Term of your Loan.
With current interest rates being at a record low, some people may find that the repayments of a 20 year loan compared to a 30 year loan is not that much more. If you’re able to commit to the increase in repayments then you may see yourself mortgage free 10 years sooner and saving a lot more on interest. 4. Debt Consolidation.
A common reason for refinancing is to consolidate any credit cards, personal loans or car loans. These loans are generally at a much higher rate of interest and will cost you more in the long run. Just remember when consolidating debt that you make the additional payments as if you were paying these debts separately, this way you are able to pay them off sooner and not drag out the loan any longer. 5. Change from Variable Rate Mortgage to a Fixed Rate mortgage.
When interest rates are low, it might be a good time to fix your current variable loan, this will protect you from any rate rises which will likely save money.
When deciding on whether to refinance your mortgage, you will need to consider the fees, such as the break costs that may be involved. Most importantly, you should weigh up the pros and cons of your particular circumstance and establish whether this aligns with your goals of refinancing your mortgage.
Explore your refinancing options today by calling Duy at Certified Lending on 0433 590 621 and let us help you with your goals.
This is general information and does not take into account your own personal financial circumstances, objectives or needs. You should consider this information in light of your own personal circumstances before making any investment decisions.