Why refinancing? There can be variety of reasons why refinancing might be appropriate. Sometimes your household income increases so as the affordability and you might want to pay your debt sooner. Other times – perhaps with a reduced household income you may find yourself under financial stress, so you want to extend your current loan term and reduce financial commitment. The new loan will pay off your existing loan completely and all at once. You would continue to make payments on the new loan until you pay it off.

Pros and Cons of Refinancing 

• Monthly loan repayments can be lowered if the refinanced loan interest rate is lower than your existing rate. Factors that might help you to secure better rate & terms can be due to market conditions or an improved credit score, factors that weren’t in place the first time you borrowed. Lower interest rates typically result in significant savings over the life of the loan, especially with large or long-term loans.
• Refinancing can make sense if it will lower your monthly payments by replacing a high interest rate with a lower one.
• It may be an appropriate approach to consolidate multiple other loans into a single loan if you can get a lower interest rate than what you’re currently paying. Having just one loan makes it easier to keep track of payments.
• You might prefer to switch to a loan at a fixed rate if you have a variable-rate loan that causes your monthly payments to fluctuate up and down as interest rates change. A fixed-rate loan offers protection if rates are currently low but are expected to rise, and it results in predictable monthly payments.

Here at Mortgage Pundit we can help you with revisiting your cash-flow that can help you to free up money in your monthly budget by readjusting loan repayments. Sometimes it can be by tapping into your home’s equity to deal with a tight financial situation. To discover your options call us today to arrange an appointment. Please note key attributes of refinancing as noted below:

• You won’t eliminate your original loan balance
• your security must remain in place and should not deteriorate its market value that compromises your equity position
• If you are looking for a top up, refinance won’t reduce or eliminate your original loan balance.