With the ever-changing world of loans and mortgages, people often opt to refinance their loans. There are many reasons why people would do this. Perhaps they want a shorter term for their home loan or wish to get a lower interest rate.
In some cases, refinancing your home is a smart move that can be financially beneficial for you. However, in other cases, it can be greatly discouraged. How do you know if you should refinance your home? Well, here are some scenarios where you should and shouldn’t refinance your home loan.
When Should You Refinance Your Home?
There is a right and wrong time to decide to refinance your home. We know the offers from other loans can be tempting, but you must first consider your situation before deciding to push through with a home loan refinancing. Here are three scenarios where refinancing your home can be a good idea.
You Want a Different Lender
Perhaps you are unhappy with your lender and feel that other lenders have more to offer you. If you think that other lenders can provide you with better interest rates and terms and even throw in some add-ons that make the offer more appealing, then this could be an excellent time to refinance your home loan. Just make sure you weigh the pros and cons of each option before you make your decision.
Your Financial Situation Has Changed
Dramatic changes in your financial situation can make you reconsider your current home loan. If you can no longer pay on time, then perhaps refinancing to a smaller loan with lower interest rates might be the best option for you.
A Fixed Rate Term Has Ended
When your current mortgage term is ending, you might want to browse through other lenders and home loans to see if there’s a better option out there for you. Perhaps you can find a more flexible loan with better interest rates. This is a good reason to shift to a different lender or loan for your next term.
When Should You Not Refinance Your Home?
Refinancing can cost you a certain percentage of your loan’s principal. So, it might not always be a good idea to refinance your home. If the cost of refinancing is more than its benefit, then you probably shouldn’t do it. Here are some examples of when it is the wrong time to refinance your home.
You Have a Fixed Loan
Breaking free from your current loan when your fixed term has not yet ended can mean paying additional fees. It’s best to wait for your loan’s term to end before refinancing your home loan.
You Wish to Consolidate Your Loans
Refinancing your home loan to consolidate your debts can be a very risky move. You can put your house at risk of foreclosure if you transfer unsecured debt into the loan without meeting the repayment deadlines. It’s best to keep your debts separate from your home loan to avoid any risks.
Home loan refinancing can have benefits, but it can also have some downsides. Weigh the pros and cons of each decision to ensure that you’re making the right call.
For your mortgage refinancing needs in Perth, WA, you can count on FinanceCorp to help you reach the right decision. We are a mortgage broker in Perth that is dedicated to making finance easy for you. All of the finance managers at FinanceCorp are fully qualified, trained and experienced mortgage professionals who live and breathe finance. Contact us today to get started!