July 18, 2016
Are you thinking about refinancing your mortgage but don’t know if it is the right move for you? While there is no right or wrong answer to this question, the fact remains that there are many benefits associated with refinancing, including:
Benefit 1: Refinancing your mortgage can lower your monthly repayment
Refinancing may let you take advantage of the lower interest rates or sharper loan products currently on offer. If your financial and/or lifestyle situation has changed since taking out your loan, refinancing to a new lender and/or loan could potentially allow you to benefit from savings suchs as lower interest rates, fewer fees, additional benefits, etc.
Benefit 2: The total interest paid on your mortgage could be reduced
While it depends on the loan terms, the costs of refinancing and also the interest rate that you receive when you refinance, it is still possible for you to pay less in total interest. That said, it is important to be thorough with your calculations of the costs associated with refinancing and calculate your total payments to forge an accurate picture.
Benefit 3: You can pay your mortgage off faster
You may find yourself in a situation where you are making significantly more income than you did when you bought your home. Paying more on your mortgage each month is not always allowed according to the loan terms, so refinancing could be the ideal option for you. Choose a lower term to pay off your mortgage sooner.
Benefit 4: Refinancing lets you unlock the equity in your home
A major benefit of refinancing is that it allows you to access the equity in your home. You can get a line of credit based on the value of your home and the amount that you've already paid on your mortgage. This is a great way to fund home renovations, pay for university costs or make an essential big-ticket purchase. The interest rate is equal to your mortgage rate, so borrowing from the equity in your home tends to be the most cost-effective financing option available to homeowners.
Benefit 5: Consolidate your debts
Refinancing can help you to consolidate debts such as a personal loan, car loan or or cedit card onto your mortgage , thereby making it easier to manage your finances.