Refinancing – Know Your Objective, Know Your Alternative
If you have applied for a home loan and you think it can be modified to suit your financial needs in a better way, then you must consider refinancing your mortgage to get the best out of your loan and especially in case of home loan, you should re-visit every once in a while. Here in this blog you will find basics of refinancing.
Know Your Objective
Before going for refinancing it is important to evaluate few details such as:
- Get overall monetary savings – Overall monetary savings is done usually from interest rate reductions against borrower’s existing home loan.
- Debt Consolidation – Debt consolidation is another great option, wherein you can consolidate all your personal debts such as personal loans, credit cards, store cards, car loans etc. in your home loan. Advantage of doing this is, home loan has cheapest possible interest rate as compared to other loans.
- Instalment repayment pattern – You can change the instalment pattern of your repayment as per best of your paying capacity or finance goal.
Once you know, motive to refinance your home loan is clear to you, there are other details to consider as well like potential cost associated with it or pitfalls. After you are clear with your refinancing costs, you can make an interest rate comparison. This can prove really helpful, especially if you thinking of consolidating your debts or seeking monetary savings. Besides, you need to consider other details such as, maximum loan tenure, fixed interest rate or variable, flexibility, these all details play a major role when it comes to reduce monthly payment commitment as well. In case, you are thinking of a cash out for other usages such as renovations, or any other investment then you can consider the option of property valuations by banks.
Alternative to mortgage refinancing –
In case you are looking for monetary saving, you can also consider your existing bank, they can restructure your existing loan to suit your financial goals better while giving you a better interest rate. Moreover, if you are looking for a cash out then you can go for the option of top up plans, you can check with your bank regarding same. Bank may offer you a renovation loan, inquire about it and then submit application regarding same. And, in case you are looking for only a small amount of cash, then availing a personal loan is more suitable option as you can avoid all the legal docs, fees or in some cases exit penalties and it is also faster.