Refinancing a mortgage in Ballyclare
If you are considering refinancing your mortgage, you should understand the costs and benefits, as well as different types of mortgages available to you.
Your home is potentially your largest financial asset, so you should ensure that you are making the right decision for your personal needs, sourcing the right lender from the outset.
At Financial Foresight one of our expert financial advisors will review your current interest rate versus the market rate, your credit score and also the various types of mortgages available to you.
Refinancing may be a smart strategic financial decision based on your current situation. Ultimately, understanding the reasons for refinancing can help you make a good decision.
Refinancing opportunities to consider;
· Interest Rates
You can achieve savings on your monthly payments by sourcing an interest rate that is at least a point lower than your current rate. Your savings could be healthy enough to accept the upfront cost of refinancing your mortgage.
· Reduce Debt
While refinancing a mortgage should not be your first line of cash to reduce existing debt, your home equity can be used to pay off higher interest debts (credit cards or auto loans).
· Change Mortgage Type
Refinancing may allow you to change the type of mortgage that you hold. If market interest rates are low, you might consider switching from an adjustable rate to a fixed rate loan. This will give you set monthly payments.
You can also review the term or length of your mortgage. Shortening the term of your mortgage will increase you monthly payment but you will save on interest payments in the long term.
· No cost/Low cost options
Many lenders now have a no–cost or low cost refinancing option that could leave you with no out of pocket expenses. Speak to one of our financial advisors who can advise you on the best option for you.
· Cash Out
There is the option to refinance your home and receive cash as part of the transaction to pay for other endeavours such as; education, investments or starting a business. Typically, your mortgage should not be your first source of funds for these types of items, but it is a financial source that is available.
When Not to Refinance
· Cash out – second time
Increasing your mortgage to pay your debts or to buy something extravagant is not a smart financial move. It is advisable to set a budget for you and your family to change your spending patterns in order to reduce your debt and start saving for your emergency fund or for a specific item like a holiday or new car.
· Extending the mortgage term
Increasing the number of years’ it will take to pay off your mortgage may reduce your monthly payment over the term of the loan, but you will incur increased interest payments.
Refinancing a mortgage is a personal decision that addresses your financial situation. With the support of one of our financial advisors we can help you understand what options and opportunities are available to you in order to make the most valuable and beneficial decision.