What is refinancing?
What is refinancing?
Refinancing your home loan simply means that you take out a new home loan to replace your old one. Your home loan is a long-term financial commitment which can range anywhere from 25 to 30 years. But that doesn’t mean you’re stuck with the same deal that whole time! Refinancing your home loan is the perfect way to score an offer that will save you money and suit your current budget better.
Benefiting from a lower interest rate, access to more features and greater flexibility are just some of the reasons why several people choose to refinance. Depending on what works best for you or what deals are available when you’re looking to refinance, you can switch to a new one entirely. It simply depends on where you can find the best deal to benefit you.
Some of the reasons why many refinance their existing home loans are:
By switching to a lower interest rate loan, you can save thousands of dollars on interest payments on the remaining term of the loan.
Refinance allows you to use equity in your home and take cash out for other investment like using it as deposit towards a new investment property.
By switching to a new loan type, you can avail new features such as ability to make extra repayments or re-draw facility.
Since taking your existing home loan, your financial situation has changed (better salary or increase in expenses due to family expansion). Hence you want to re-assess your financial situation and avail a best suited loan based on your situation.
Sure Finance can help you assess if refinancing your existing loan helps you or is that an option to consider at a later point. After the preliminary assessment is done, we can help you choose from all the options available. Once you’ve decided which lender/home loan you want to switch to, your new lender will pay out your existing home loan in full with your new home loan. Sure Finance will facilitate this entire process.
If you have a question that deals with clients, customers or the public in general, there is bound to be a need for the FAQ page.
That will depend on your loan amount, how long you have left on your loan term and what interest rate you’re switching to and from. But to give you an idea, let’s look at an example.
Say you have $400,000 left on your current home loan and you’re 10 years into a 30-year loan with an interest rate of 4.20%. If you stick with your current loan, your monthly repayments would be $1,956, and over the next 20 years, you’d pay $152,207 in interest.
Now, imagine you refinance that loan to an offer with 3.60% interest. Your monthly repayments would drop to $1,819, and over the next 20 years, you’d pay $125,650. That’s a saving of $26,557 over entire term of your loan.
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