Myth Busting - Understanding refinancing myths
Everyone wants to pay off their mortgage as quickly as possible. Refinancing your loan gives you the opportunity to take advantage of competitive rates and secure a better deal than what you previously had. However, common misconceptions can stop people from refinancing. To make refinancing clear and easy for you, we’ve dispelled these common myths so you can feel confident in your decision making.
When refinancing it is important to understand both the initial costs and long term savings of refinancing. Tally up how much you can save with your new loan and be sure to take into account all costs you may incur leaving your current loan and getting a new loan, such as, any exit fees, break fees, joining/establishment fees, solicitor fees, registration fees, etc. Your new lender may waive joining/establishment fees and offer lower interest rates. While it can seem costly at the outset, paying the fees associated with changing lenders might not impact your bank balance much as your new loan could bring in greater savings through lower monthly repayments. By doing your research and understanding what fees you’ll incur, you’ll be better placed to choose the right deal for you. There may be other fees associated with taking up a new loan so be sure to consult a mortgage broker to help you understand the true cost and any potential savings to be had.
Speaking of research, looking around for top deals that are suitable for you is crucial, but it doesn’t need to be time-consuming or tedious. Nor do you have to do it on your own as this is well within the capacity of a mortgage broker. Your broker will help you transfer to the new loan and look after the paperwork. Generally speaking you’ll need to provide your payslips, loan statements and an estimate of what you can pay each month, so having an organised filing system will help.
Don’t be lured in just by low rates. The myth they are the most important factor of refinancing can mean people ignore a loan’s lack of flexibility, features or conditions such as the low rate not applying to the full length of the loan. Make sure you’re comfortable with the entire package before making a move.
While these tips will help the process run more efficiently, refinancing can still take the same amount of time your original loan took. While refinancing isn’t a quick fix, it can be an excellent way to save in the long run. Be sure to contact your broker if you’re thinking of refinancing as they can help you navigate the maze of options and can tell you whether your current loan is still presently one of the most suitable for you, or if there are better options out there.