Once the initial euphoria of being a homeowner starts to wear off, paying off the mortgage can seem like a burden. This is where a mortgage refinance can help you. The mortgage market is incredibly competitive with numerous lenders trying to outdo each other by providing lower interest rates and more benefits. As a borrower, this puts you in an ideal position to make the most out of the competitive market scenario. Opting for a mortgage refinance is a great way to reduce your monthly payments, secure better interest rates or pay off your mortgage faster.
In simple terms, a mortgage or home loan refinance is the process of swapping your existing home loan for a new one from another lender. It is usually done in a bid to secure competitive interest rates or better features that will help ease the mortgage burden. However, before applying for a home loan refinance, you should check if you are out of the lock-in period or else you may attract a penalty from your existing lender.
Refinancing home loans can offer you plenty of benefits when done for the right reasons. Here are some of the most important benefits of home loan refinancing:
- Lowers your monthly instalments
- Lowers lifetime interest costs
- Additional financing for other purposes
- Consolidate unsecured debts at lower interest rates
You can opt for a home loan refinance
for a number of reasons depending on your current financial situation. A home loan refinance makes sense when:
With a mortgage refinance, you can switch to a mortgage loan with better features such as offset account, ability to redraw for no extra cost, loyalty rate reductions etc. At times, mortgage features like this can help you save costs and pay off your mortgage more conveniently.
A lower interest rate is one of the prime reasons for home loan refinancing. Most housing loan packages offer lower interest rates, also known as teaser rates, for the initial 2-3 years, after which the increase the rates gradually increase over the remaining term. By refinancing your mortgage, your loan is reset to the teaser interest rate all over again. A lower interest rate will ultimately translate to a lower monthly instalments, thereby offering you some financial relief.
Over the years, your mortgaged property will appreciate in value. By opting for a home loan refinance after your property has gathered some equity, you can avail a greater loan amount and use it for various financial needs.
Once you’ve determined it’s the right time to refinance your mortgage, you need to opt for the best options. Given the number of refinancing options available in the market, choosing the right one can seem confusing. Using a mortgage refinance calculator will help you make an informed decision by giving you a rough idea about your new interest rate and your new loan amount. Once you input the data, the mortgage refinance calculator will give you an estimate of your new monthly payments and lifetime savings. Ultimately, these indicative figures will help you secure a better deal for your mortgage refinance.
The information contained in this document (“Information”) is for general information and/or educational purposes only and does not have regard to the investment objectives, financial situation or particular needs of any specific person. No part of the Information may be reproduced, copied in any manner or distributed to third parties without the prior written permission of Citibank Singapore Limited (“CSL”). The Information is provided “as is”, without warranty of any kind, it has not been independently verified by CSL, its related entities and their respective officers, employees, directors and agents (collectively, the “CSL Group”). Use of the Information is at your sole risk.
The CSL Group shall not be liable and expressly disclaim liability for any error or omission in the content of the Information, or for any actions taken by you or any third party, in reliance thereon. The Information is not guaranteed to be error-free, or to be relied upon for investment purposes, and the CSL Group makes no representation or warranty as to the accuracy, truth, adequacy, timeliness or completeness, fitness for purpose, title, non-infringement of third party rights or continued availability of the information.
To the maximum extent permitted by law, the CSL Group shall not be liable for any loss or damage of any kind whatsoever (including, without limitation, any special, consequential, incidental or indirect damages, or damages for loss of profits, business interruption, and any and all forms of loss or damage, regardless of the form of action or the basis of the claim, whether or not foreseeable) arising out of the use of the information (provided in any medium), even if any member of the CSL Group, has been advised of the possibility of such loss or damage.