Refinancing a home mortgage loan is the process of transferring your home loan from your existing bank to another bank that offers a lower interest rate. Some banks allow borrowers to terminate and refinance their loans after 3 or 5 years. However, this technique does not always provide the best options if you do not carefully examine the lock-in period, rate, and penalty terms and conditions of the new package Waramanga. With the variable condition of the SIBOR and SOR, shifting loans require careful review and planning on your part. Why do you need to refinance your mortgage loan? We all are looking for opportunities to save money by lowering our monthly repayments. Refinancing is between banks and should not be confused with repricing, which is made within the same bank you have your existing mortgage. As a general rule, you should consider refinancing only when you have or nearly completed the lock-in period and the offer is really worth grabbing.
The clawback includes fees such as the legal cost, valuation, and insurance that borrowers used to pay before or after the loan approval. In 2012, the cost is around $3,000. Breaking the clawback locked-in period will make you pay the existing and new bank’s clawback fees instead. To avoid this, make sure you have completed your clawback period. Refinancing is a brilliant way to save money if you just were careful about the clawback and locked-in period.
Comparing and Shopping for Home Loans
Just in case you want to know, the MAS restricted the maximum loan value ratio up to 80% of the property price only since 2010. The best way to refinance is to start the application to the new bank 3 or 4 months before the expiry of your locked-in period. This gives you time to consider the new bank as well as send a cancellation notice to your existing bank. Another thing that you should consider is the locked-in period of the new bank. If you are planning to sell the property within a year or two, then it would be wise to consider a package with lower locked-in period or without a locked-in period.
Your Option and Its Cumulative Interest
Compare the cumulative interest you are spending on each option throughout the tenure of your loan. This refers to the total interest you need to pay the pay throughout the life of the loan. If this process is overwhelming for you, then you can call a home loan mortgage agent to help you.