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We can arrange your finances for you. We have helped hundreds of clients with their conveyancing and property needs, and we can advise you on the best loan products available at the time. Call us and we can discuss your options with you. We pass on 100% of any introduction fees we receive from the bank/financial institution to you, so we have no bias towards particular products.
If you’re thinking about refinancing, the best thing you can do is bear in mind The Law of Caveat Emptor:
“Buyer be alert”,
“Buyer be on guard”,
“Buyer be prudent”,
“Buyer inform yourself”,
“Buyer protect yourself”.
In other words: don’t be naïve. Be careful.
With That Said – A Quick Guide to Refinancing
In essence, refinancing is the act of replacing one form of debt with another. It usually refers to either combining debts into one place, or swapping debts in order to change the repayment terms. When it comes to a home loan, refinancing usually means paying off your existing mortgage and taking out a new one.
Why You Might Want To Refinance
If you’ve taken steps to improve your credit score, you may find yourself in a situation where you’re eligible for a lower rate mortgage. In that case, refinancing could make good sense – your situation has improved and lenders should trust you more. Refinancing under these circumstances may be sensible, provided the savings you make outweigh the actual costs of refinancing.
Refinancing can also be useful if you want to significantly extend or shorten the length of your mortgage. You may want to shorten your mortgage if you’ve earned an increase in wages, and would like to pay off your debt sooner, and with less total cost. Of course, your monthly payments will increase as a result, and you have to be prepared for that.
If you’ve determined that you’d prefer a longer, more costly mortgage in returns for lower monthly payments, then that’s possible with refinancing. However, it’s only a good idea if you’ve carefully considered the consequences.
The Potential Pitfalls of Refinancing
Refinancing a home loan can sometimes be useful, but you do need to be careful. Combining all your debts or swapping one for another often doesn’t actually improve your outlook. Although it might feel like having all your debts in one place is a step forward, in the long term it could end costing you more overall, and may not even be a better move in the short term.
Many people, in desperate short term efforts to pay bills, take out refinancing in reaction to their situation. Often, this only leaves them worse off a few months or years down the line, and in worst-case scenarios, it is the start of a debt spiral. If you’re struggling with debt, more debt is usually not the answer.
The key point to remember is this: refinancing is only offered by companies who seek to make a profit. If they’re profiting from you, what are you getting out of it? You have to decide whether the benefits of refinancing, such as convenience or short-term opportunity, are really worth it. Ultimately, you have to dispassionately consider your reasons for refinancing, and decide if it really makes sense.