By now, it's a known fact that interest rates for home loans are at an all time low, thereby making now the perfect opportunity to secure more favourable interest rates for your mortgage.
The lowered interest rates could help you shorten your mortgage repayment term, and alleviate what is likely to be your biggest recurring monthly expense.
Given that loan amounts are usually huge sums, even a 0.2% difference can save you thousands of dollars per year for your mortgage repayment.
Following are some reasons why homeowners decide to refinance their home loans:
1. Making Home Improvements
Maintaining your home is hard work & costly.
Usually, home owners will pursue a refinance rather than a personal loan to renovate their house because, personal loan may have higher interest rates.
2. Change Loan Programs
Are you satisfied with your current loan program?
One may be under a 5 year arm, but somewhere down the line, they decided they would prefer a 30 year fixed loan. Whatever the reason may be, a refinanced home loan will solve the problem.
3. Lower Interest Rate
Take advantage of interest rates downfall.
Use this opportunity to refinance the current loan to lower your existing interest rates and save money on mortgage expenses. The money that a borrower saves on mortgage expenses can be invested in other financial investments, like what a particular client of ours did! You can find his case study here.
4. Pay Off Debts
Free up cash for day-to-day living expenses.
Pay off debts with high interest rates. A refinanced loan can allow you to cover future expenses such as education costs for yourself or family members, or even a vacation (once it's safe to travel again, of course!)
5. Fixed Payment
Ensures repayment amount remains the same.
If the proceeds from the home loan have been used to get cash out, it is likely to be cheaper than obtaining personal loans, or maxing out the balances on credit cards. Once the loan is set, the payment amount remains the same throughout the course of the loan.
6. Refinance Cash Out
Getting lower interest rates.
Some home owners who have enough equity accumulated in their homes refinance to cash out their equity and get a lower interest rate.
Hope this article gave you a better insight into refinancing!
Feel free to use our Mortgage Calculator to compare the different loan packages offered by the banks at a glance!
Or, you could always find out more about our Mortgage Calculator here!