Refinancing your Home Mortgage
So you are thinking of looking for a home mortgage with better home loan rates. You want to refinance your house loan. But, do your research first and just don’t switch home loans for the first one you like.
You already have a first mortgage on a condominium in Singapore (I wish, I know). And when you took out the original mortgage loan, it had a fixed home loan rate for the first 5 years and now it is has reverted to a variable mortgage rate.
Now you have some equity in your home you may want to refinance your mortgage to get better rates and conditions. You may even consider buying a second property somewhere – maybe somewhere off the beaten track in Italy. And you may want to do this with no money in the bank.
Believe it or not, you can actually buy a house with nothing in the bank. Don’t think it is that easy though. Your will at least need property of some sort to put up as capital for a second mortgage. Look refinancing the mortgage on your first home to free up capital buy another home.
Loan Refinancing and the Pitfalls
There are a lot of good, valid reasons to refinance your mortgage:
- an opportunity to change the mortgage interest rate and pay lower monthly repayments
- an opportunity to get better terms and conditions on your mortgage rate
- an opportunity to consolidate all you debt
- an opportunity to free up any equity in your home.
While there are valid reasons for refinancing there are pitfalls too. Make sure you look into refinancing your home mortgage before you do anything. Ask yourself what you want to achieve from refinancing your mortgage rate.
You need to know what you are doing, or your home loan could cost you more than ever every month. Be careful of mortgage brokers who are just after their commission. Make sure you check out any product recommendations they make – you want the best deal you can get or else refinancing your house mortgage is not worth your while.
Put in simple terms, your current mortgage is $300,000 at 8 percent interest, which is an interest payment of $24,000 a year. Another bank may offer you 5 percent interest which is a saving of $9000 a year. That is a lot of money, and I would rather have it than give it away in interest. You can use the savings to do some home improvements.
The biggest pitfall when people refinance their home loans is a lack of knowledge about what they are doing. When looking at an alternative mortgage lender, make sure mortgage advisors give you the best advice. Get online and check out the packages for yourself.
Where one loan may have phenomenally low interest rates, you may find big penalties, buried in the small print, if you pay the loan out early. Or there may be other clauses that will cost you money over the long run. Always read the bank contract. Always make sure you know what is in it before you sign on that dotted line.
Where to go for Advice about House Loans
The best place to get advice about refinancing your house loan is an unbiased, experienced mortgage specialist. One who is not trying to make a commission from selling you a loan.
Refinancing your home mortgage is a big step and has long-term financial effects. Choose you advisor carefully to avoid the pitfalls of refinancing your home loans.
Tags: home loans, home loan rates, home loan refinancing, mortgage brokers, mortgage rate, refinance your mortgage, refinancing your home mortgage, second mortgage