Refinancing Secrets Noone Told You
Like any other financial decision, the decision to refinance your home loan must be based on proper research and numbers. Don’t shy away from crunching the numbers to ascertain whether refinancing your home loan is the right move for you or not.
Here are 3 refinancing secrets to know before you take the plunge:
It is not free – Like every good thing in life, refinancing your home loan is also not free. There are several costs such as lender’s fee, exit fee, the cost of setting up the loan, duties and taxes that will need to be paid when you refinance your home loan. It can cost you up to 5% of your total loan amount to refinance – So if you are refinancing a loan of $200,000, it can cost you anything between $5,000-$10,000 to set up the new loan.
Savings vs. Cost – Refinancing your home loan is a good decision if the savings on your home loan make good the refinancing costs in a year or so. While the decision to refinance also hinges on the reasons why you want to refinance – purely for a lower interest rate or more flexibility in your home loan or simply better customer service, it is still important to check whether refinancing will actually save you money or not.
Turning the clock, backward – Refinancing your home loan, while affecting significant savings, will also take your home loan dynamics to the start. When you take a home loan, the initial repayments are applied more towards paying off the interest on your home loan than paying down the principle. Few years into the home loan, a substantial part of your repayment is applied towards paying off your actual principle amount. However, when you refinance, the clock will turn backward and you will be servicing more of the interest than the principle, again, for few months. Check how long will it take you to pay off your new home loan compared to the existing one.
Are you ready to refinance? Whether you’re searching for a fresh home or planning to refinance, shopping around for a new home loan can be exhausting. Coronis Mortgage and Finance are here to help. With access to over 30 lenders, we can find the right home loan which suits your current needs. CLICK HERE to contact us today.