What to Learn Before Doing Home Loan Refinancing

So, your home’s value has increased enough for many homeowners to consider refinancing their mortgages. The increase in your equity – the amount that your property is worth over what you owe on the mortgage – can be used to pay off various debts or make lifestyle changes. But are you able to borrow more? Should you lock in a fixed rate? Are rates likely to keep falling?

Those are some of the questions to consider when trying to decide if it makes sense for you to refinance your home loan. Here are four key things to look out for when deciding on Home loan refinancing:

No. 1: Seek professional advice

Don’t think that just because interest rates have fallen, you should automatically go ahead and refinance even if it could cost more in fees and charges.

Rates still vary widely by lender and the type of loan you might get could also affect how much you end up repaying.

So rather than switching lenders, it’s worth getting advice from someone who knows the market – such as a mortgage broker or accountant – to help calculate if refinancing will save you money in terms of dollars and cents.

No. 2: Compare home loans available through your current lender

If you do decide to refinance, don’t automatically assume that your current lender is best for you. It pays to check out other options and compare rates offered by other lenders.

No. 3: Consider the negatives of refinancing

What are you giving up by paying higher rates on a new loan? Are there any non-monetary costs involved in switching lenders, such as having to move your home loan over to another bank? For instance, will it affect any other financial arrangements you have with the same lender such as credit cards, an investment loan, or overdrafts?

Also pay attention to fees and charges associated with refinancing – for example, early repayment fees if you decide to refinance an existing fixed rate sooner than expected. Some lenders also charge settlement or legal expenses when processing refinancing applications.

So, your home’s value has increased enough for many homeowners to consider refinancing their mortgages. The increase in your equity – the amount that your property is worth over what you owe on the mortgage – can be used to pay off various debts or…