How to Repay a Refinanced Mortgage
Refinancing a mortgage can provide borrowers with a way to lower interest rates and monthly payments. This option can also be used to consolidate debt and renegotiate the overall terms of the loan. Essentially, refinancing is a way to trade your mortgage for a new one.
Elements to Consider Before Refinancing
Refinancing a mortgage is a good idea for some homeowners, but it is definitely not for everyone. Several factors need to be considered before making this important decision including the fees, market environment, and personal motivations.
If you refinance a mortgage wisely, it can save you money in the long term. One thing to keep in mind is that your previous and new lender will charge refinancing fees such as a discharge fee, mortgage registration fee, loan application fee, and settlement fee.
Before refinancing a mortgage, speak with your previous lender and new lender to completely understand the refinancing fees that they charge before you apply.
Aside from the fees, it is important to consider the market environment and your personal motivation. If market interest rates have decreased since you got your loan, then refinancing might help save you money. Similarly, if you recently changed jobs or want to consolidate your loans, then refinancing could also be a good decision.
However, if you plan to move out soon then refinancing is probably not in your best interest. This is also the case if your employment is unstable or your credit history is poor. Our consultants can help you understand the drawbacks and benefits of refinancing a loan based on your unique situation.
Tips for Repaying a Mortgage
Regardless of whether you refinance a mortgage or not, it is still important to make sure you can repay the loan. There are several things that you can do to ensure mortgage repayment such as cutting expenses, increasing your savings, and making larger payments.
One way to make sure that you can repay your mortgage is by cutting your personal expenses. Simple budgeting tips such as cooking at home or spending less on luxury goods can easily save an extra one or two hundred dollars a month.
If you want to pay off your mortgage early, then one alternative is to make larger payments. This can be slightly larger monthly payments or occasional lump sums. For example, putting your tax refund or annual work bonus towards your mortgage can help you repay the loan several years earlier.
One of the most effective techniques for repaying a mortgage is to leverage your offset account. By putting your savings into an offset account, you can decrease the interest payments. Similarly, if you have your wages directly deposited into your offset account, this can decrease the total interest that you pay.
Refinancing with Loan Monster
If you are interested in finding out more about refinancing a loan, then please fill out the form on this page. One of our representatives will contact you within 24 hours. They can help answer any questions that you have about mortgage refinancing, as well as discuss additional tips for repaying the loan.