Are you looking to lower your mortgage payments? Maybe they’re just too high for you at this point in time or maybe you’re simply looking for more flexibility in your monthly budget. 

Either way, you’ll be happy to know that this can be done, and the way to go about it is refinancing. 

Now, there are several paths you can take to make this happen, and you should also keep some important things in mind before you decide to initiate the process. 

Don’t worry, we’ll cover the most important of them in this text and prepare you well. Let’s get going!

Refinancing because the interest rates are lower

It’s not uncommon for people to refinance their mortgage because they see that the interest rates have become lower. It certainly seems logical – why not take the chance to pay lower monthly instalments if you can?

Just remember that if you’re changing lenders, you may need legal help to complete the process, and Optimal Solicitors from Manchester specialize in that.

However, there is a catch. If you opt for this, you can expect to have to pay the so-called refinance closing costs. And this can be a fairly significant amount, too.

So, you have to calculate how much you stand to save if with a lower rate and compare that to the total refinancing costs that you’d have to pay. It is generally considered worth it if you can get the rate down by one per cent, but that depends on your situation, of course.

Refinancing to gain more time to repay the mortgage

Another popular solution when it comes to paying the mortgage is refinancing in such a way that you extend the period you have for that. Essentially, you will be moving the deadline down the road.

For example, if you have a 30-year loan on your hand, a part of which you’ve already paid off, you can transform the remainder into a completely new 30-year loan. That way, you get your mortgage payments down.

However, the main thing to consider when making this move is the interest that will accrue this way. Yes, you will breathe much more easily every month but will also end up paying more in total. You have to ask yourself is that really worth it.

Naturally, if you simply can’t make the payments anymore, this move can be a lifesaver that helps you get back on your feet.

Getting rid of insurance

Apart from helping you directly with lower payments, refinancing can also help you in another way. If you refinance and turn your mortgage into a standard loan, you may be able to be rid of mortgage insurance, which will bring your payment down.

Just remember that if you were sold payment protection insurance in a dishonest way, there are legal experts that can help you get compensated for that.

The fee that applies to insurance can be anywhere between approximately 0.5% and 1% on an annual level, but this will depend on a variety of factors.

So, you have quite a few options when it comes to refinancing your mortgage. Analyse them all before making a decision, preferably with expert help by your side.

This entry was posted on Sunday, November 22nd, 2020 at 6:55 am and is filed under Mortgage, Refinance Mortgage Loan, Refinancing. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.