Getting a new mortgage to replace the original is called refinancing.
Refinancing is done to allow a borrower to obtain a better interest term and rate.
The first Home loan is paid off by the new lender, allowing the new Home loan to be created on better terms.
One of the best reasons to refinance is to lower the interest rate on your existing loan.
Historically, the rule of thumb is that refinancing is a good idea if you can reduce your interest rate by at least 2%. However, many lenders say 1% savings is enough of an incentive to refinance.
Refinance will generally provide one or more of the following:
- A better mortgage interest rate
- Lower monthly payments
- Shorten your term
- Borrow money for a renovation
- Consolidate debts such as personal loans or credit cards
- Combine two mortgages into one
Teo Torrelli, Director of MKS Lending Group has been arranging Refinance Loans since 1985. He will take the stress out of the loan application process and clearly explain the benefits of a home loan refinance and if it best suits your circumstances.