Refinancing your home loan can potentially save you a considerable amount of money over the life of your mortgage. This is because you are able to take advantage of the lower interest rates or even better home loan products currently on offer. This being the case, it is now the right time to take that bond step and go for a mortgage refinance in Montreal. Here are some of the main benefits that are associated with refinancing your home loan.
Lowered monthly repayments
If your lifestyle or financial situation has changed since taking out your loan, refinancing the loan to new lenders or even the current one but at better terms could potentially allow you to benefit from huge savings such as reduced fees, lower interest rate, extra benefits, and many more. If the current interest rates are lower than what you are paying on your mortgage, opting for mortgage refinancing is the perfect way to further lower your monthly payments. However, it should be noted that the longer you stay in your current house, the more money you can save by refinancing.
Although the majority of mortgage lenders say the rates must drop by at least 0.50% basis points for refinancing of the same loan term to make financial sense, this threshold is different for each individual borrower. The most important thing to take into consideration before making a decision to refinance is the amount of time it takes to recoup the costs to refinance.
Unlocking the equity in a home
A mortgage refinance allows the homeowner to access the equity in his or her home. As result, the homeowner is then able to get a line of credit based on the value of his or her home and the amount that has already been paid on the mortgage. Mortgage refinancing is a great way to obtain money for important things such as:
The good thing with all this is that the interest rate is equal to the mortgage rate. This means that borrowing from the equity in a home is a more cost-effective financing option than any other available in the market for the homeowners.
Faster mortgage repayment
A homeowner might find himself in a situation where he is making more money than he did when he initially bought his home. But according to the loan’s terms, the borrower is normally not allowed to pay more on his mortgage each month. The only way to go around this issue is to refinance the mortgage. Through a refinancing arrangement, the borrower is then able to opt for a lower term to pay off his mortgage, and at the soonest time possible.
Depending on a borrower’s prevailing circumstances, it also makes perfect sense to switch from a long-term loan to a short-term loan through a refinancing arrangement. This is particularly beneficial to borrowers that have enough money to cater for higher monthly mortgage payments. By paying off the mortgage faster than was originally stated, the borrower can be able to save significant amounts of money in interest rates over the life of the loan.
Reduced overall payable interest on the mortgage
Although this mostly depend on the loan’s terms, the cost of refinancing and the entire interest rate receivable when a borrower refinances his or her mortgage are commonly low. However, it is recommended to be thorough with calculations of the costs associated with refinancing. To forge an accurate picture, it is advisable to calculate the total payments.
Refinancing a mortgage assists the borrowers to consolidate debts such as car loans, personal loans, credit card loans, etc, onto their mortgage. This way, they are able to easily manage their finances. Not only this, they are able to easily save money by doing so as now they are only paying one loan. Also, remember that different loan products attract different interest rates.