Thinking About Refinancing?
There can be many reasons to refinance – a job change influencing your financial situation, a current lender’s loan rate that isn’t keeping pace with the competitors, or you want to obtain even more real estate or perhaps need to renovate what you already have.
Another reason to refinance your home loan might be to consolidate your debts and only have one monthly repayment. If you have multiple debts from various sources or institutions such as a home loan, personal loan, credit card or other high interest loans, and you’re having trouble paying these off, then it could make sense to roll these debts together with your home loan. The main advantage here is that your home loan rate is typically a lower rate.
Some credit cards have rates as high as 20% or more, which is more than double what you’d find with a home loan rate. The key is to make sure you don’t lower your repayments once you’ve consolidated. The same is true if you manage to get lower interest rates on your variable home loan. The savings that this provides should be used to pay the loan off faster, so don’t be tempted to use this as spending cash.
Some borrowers also want to refinance to use the equity in their home to pay for home improvements or other reasons. Keep in mind, while allowing you to expand your property portfolio or value, it will also greatly increase the loan term.