Re-mortgaging your home mortgage can sometimes make good financial sense for many people. The difficulty many homeowners have is determining when the right time to refinance might be.
Everyone’s financial situation is unique, with varying incomes and expenses. Different people also have their own individual financial goals.
In order to decide whether you should refinance your mortgage or not, it’s important to take into account how re-mortgaging could affect your own personal financial situation first. Before you head into your local bank branch, take the time to discuss your situation with your local independent financial advisors.
When you understand a little more about the effects refinancing a mortgage can have on your financial future, it becomes easier to make an informed decision. Here are some examples of when you might consider re-mortgaging:
To Reduce Interest Rates
Many lenders introduced stricter lending policies following the financial crisis, which left some borrowers no option but to enter into whatever mortgage they could find. Fortunately, there are much more competitive loan options available today. You might now qualify for a home loan with a lender offering reduced interest rates.
Lower Monthly Repayments
If you’re able to refinance your existing mortgage to a lender offering lower interest rates than you’re currently paying, it’s possible you could also reduce your monthly repayments as a result. Spending less on your mortgage repayments each month means you could free up your monthly cash flow, leaving you with more money to spend on other things.
To Consolidate Debt
There are some occasions when it makes good financial sense to consolidate some of your personal debts into your home mortgage. If you have equity available in your home, you might be able to roll other debts into your mortgage amount.
Many people pay exorbitant interest rates on outstanding credit card debts, personal loans, and other unsecured debts. By re-mortgaging to consolidate some of those debts, you might have the opportunity to reduce your monthly payments and cut down on the amount of interest you pay overall.
If you’ve been paying down your mortgage balance for some time, you might have built up some equity in your home. Equity is the difference between the value of the property and the amount owing on your mortgage. Re-mortgaging could allow you to unlock some of that equity to use for investing in your financial future.
The best way to tell whether you should refinance your mortgage or not is to contact us. An independent mortgage advisor can help you locate the right lender with competitive interest rates to suit your needs.