4 Signs It Is Time to Refinance Your Mortgage – What to Know
You have repaid more than half of your loan. You think your performance in loan payments and your current financial situation can help you get a better term. They say refinancing has money-saving features. Should you trust your gut and do it? When is the best time to get refinancing? Is there really a best time?
What does refinancing a mortgage mean?
Refinancing means getting a new mortgage to replace your current mortgage. It is often done to get a better interest term and rate compared to the original loan. In this process, the first loan has been partially paid off, so the second loan will pay off and replace the remaining balance.
Here are some of the possible advantages if your application for refinancing is approved:
- Reduced monthly payments
- Lower interest rates
- Shorten the loan term
- Cash-out from large purchases
- Change in the mortgage lender
- Debt consolidation
Similar to your first loan, getting a refinance will require you to go through the loan application process again. It can be with the same lender or from another provider. Like any other loan application, there are certain criteria you need to meet first. If not, the second loan application can be risky for you.
Here is how to know if it’s the right time to get a refinance for your mortgage:
1. Your lender might increase their interest rate
Interest rates are difficult to predict, but if you believe that your current money lender has the potential to increase their interest rate in the near future, it could be the time to look for other options. Keep in mind that this chance is subject to change based on the different economic conditions and trends. Because no one can predict the future, the best judgment is necessary to back up this reason. You must also need to remember that the next lender may also increase their rates.
2. Your existing interest rate is no longer competitive
If you see that the current interest rate is no longer working for you, maybe it is time to get a reassessment. If your application for refinancing is approved, you have the chance to lower your interest charges and monthly repayments. To gauge the current interest rates on the market, seek assistance from your financial advisor or mortgage broker, or refer to home loan comparison tables you can find online.
3. You have a secured job
When you have a stable and secured job for at least two years, you have bigger chances of getting approved. It is proof that you have a steady income and are capable of paying off your mortgage in the term discussed. You can take advantage of this since you are considered a low-risk borrower, you are a strong candidate for refinancing.
4. You can consolidate your debts
One way of minimising your repayments is by consolidating your personal debts into your mortgage and making sure to pay them as early as you can. When you centralise your debts with a refinance, you pay less interest. A refinance, if approved, can help lower your monthly payments. If you need to reorganise the way you pay off your mortgage and other debts, getting a refinancing might help.
Conclusion
Your current financial and personal situations are the important factors to study when thinking of deciding to refinance your home. To help you find the right timing and the best financial decisions, talk to an experienced mortgage broker or financial advisor.
Need a financial solution to refinance your home loan in North Shore? Call us at 1300 252 088 to get your desired financial outcomes today!
