Just because your mortgage has a 20-year term, for example, doesn’t mean you have to stick with it until it is fully repaid. You have the option to refinance your loan. There are plenty of reasons why people consider refinancing, and here are some of them.
1. When you find better rates in the market.
This is probably the most popular reason why people have their loans refinanced. The lending industry is a competitive one, which is why lending institutions constantly tweak their products in order to attract consumers. Over time, you’ll likely see better rates than what you have now. When this happens, you can approach your current lender and ask them if they can give you a better rate, or at least a competitive one. If they can’t, you might want to consider switching lenders.
2. When rates are about to rise.
Although interest rates are currently at record lows, it won’t stay that way forever. You can anticipate the rise in interest rate by switching to a fixed rate loan if you currently have one with a variable rate. That way, you’ll be able to enjoy the low interest rate for a bit longer.
3. When your financial situation changes.
Having a hard time repaying your mortgage because of a change in your financial situation (e.g. birth of a child, unemployment)? You can seek refinancing to switch to a loan you can afford.
4. When your home needs to be renovated.
Think it’s time to repaint your home, replace leaky faucets, and make major changes to it? You can also use refinancing to take out a construction or renovation loan. Since these loans are specifically designed for what you need to do, they could aid you financially in what could be a costly project.
5. When you’re planning to buy an investment property.
Buying an investment property can help you grow the value of your money in the long term. However, it can be quite challenging to do when you’re still paying your home’s mortgage, as this can have a significant impact on your ability to pay both loans. You can then seek refinancing to help you solve the problem.
6. When you’re having trouble with your debts.
Are you on the verge of defaulting on your debts? You can seek refinancing when you want to consolidate your debts in order to ease their burden on your finances.
Although refinancing has its benefits, please keep in mind that it isn’t for everyone. It helps to speak with a financial adviser first to see if this is the appropriate option for you. For example, if you’re having trouble with your debts, you might have to look deeper into your situation before you refinance.
If refinancing suits your situation, we at Launch Finance can help. From helping you find a suitable loan to assisting you with all the necessary paperwork, you can depend on our expertise to help you achieve your financial goals. For more information, please send us an enquiry today.