Are you a homeowner looking into purchasing another home or an investor wanting to capitalise on the gains of your properties? Regardless of your position, if you are one of the individuals mentioned above, you may want to look into ‘refinancing’ your home loan.
First of all, what is refinancing?
Refinancing is a process where a new loan is implemented to replace the old loan with a better rate, ultimately saving more money with each repayment. This can either be done by negotiating with the lender for a new contract or contacting a mortgage broker in discovering ideal deals for you elsewhere.
What is the benefit of refinancing?
There are loads of benefits if you decide to refinance your home loan – it could be a reduced rate or complete your loan sooner. As mentioned above, refinancing helps you to obtain a
better home loan. This process can affect your repayment significantly and therefore, the importance of refinancing.
The home loan can be categorised into two methods: Fixed rate and variable rate.
As we are witnessing one of the lowest home loan rates, it is crucial to discuss with a professional to seek if your rate currently is and will be the best for the future. It may be ideal to select the fixed rate in optimising your gains from the repayments, or if advised, the opposite may apply. However, the risk of choosing the variable rate exists as it may rise above the current rate.
So, when should we refinance our home loan? It is strongly advised and highly recommended to seek professional assistance if:
- Fixed-rate period about to end
- The previous review being two years or longer
- Change in the financial situation
- Planning to buy more property
- Planning to renovate
- Wish to access the home equity
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