Regardless of your situation, it may be worth knowing that reviewing your mortgage annually is beneficial for you.
Plenty of changes can happen in a year, your personal situation or financial standing could change, interest rates could shift and home loan lenders could begin taking a more strategic approach to compete for business. If any of these events occur, you may discover that your home loan has ceased to fit your needs.
So what option is available to you if your home loan no longer fits you? Well, you can opt for refinance for one thing.
What is refinancing?
The process of paying out your existing home loan by getting a new loan, either from your current lender or by another lender, is called refinancing. With refinancing you can repay your home loan in advance and move on to attaining your next financial target sooner.
Also, you can reduce your mortgage repayments, combine your debts or even get hold of equity in your home through refinancing.
Ask yourself these questions to find out if your existing home loan is still right for you:
- Has there been a change in your financial/lifestyle situation since getting the loan?
- Are you searching for a “more inexpensive” loan alternative?
- Are you intending to start a family in the near future?
- Are you intending to make over your home?
- Are you intending to upgrade or downsize your home?
- Are you not content with the service provided by your present lender?
- Are you thinking about buying an investment property/ies?
- Are you thinking about combining your debts?
If your response to any of these questions is “yes,” refinancing may be worth exploring.
How does refinancing work?
Refinancing essentially involves taking out a new home loan and using a portion or all of the money to pay out your current loan. Your lender handles this process, so you don’t have to fret about writing and sending any cheques.
Generally speaking, the process is relatively easy and seamless. With that in mind, there are some things you should be aware of before opting for refinancing, including:
- Hidden fees and charges: Find out if there are exit charges, break fees or deferred establishment charges that you may need to pay if you decide to pay out your current loan in advance.
- Borrowing fees: You may be charged by your lender various upfront fees, including a settlement fee, valuation fee and a loan application fee. However, take note that not all lenders will impose these fees and some may be open to discussion.
- Lender’s mortgage insurance: This insurance is intended to safeguard your lender in case you default on your loan. You may have obtained a Lender’s Mortgage Insurance at one time before, but remember that this insurance is not transferrable. You will need to pay it again if you are planning to take out 80% or more of your home’s value.
- Stamp duty: You may have to pay a stamp duty if through refinancing you raise the amount of your loan. Also, you may need to pay a Mortgage Registration Fee.
So, before making any decision, remember to check out the different fees each lender requires you to pay and then determine whether the gains associated with refinancing surpass the costs involved.
For your Annual Mortgage Checkup one person to consider is :-
Justin Lindbeck at Yellow Brick Road
Mobile: 0437 713 152, Email: firstname.lastname@example.org Website