Getting a new mortgage to replace the existing one is called refinancing. Refinancing is done to allow the borrower to acquire benefits from a lower interest term and rate compare to existing one, change to a better mortgage product, get the additional cash out to proceed with the property improvement or purchase another new property. Sound very exiting right?
Well, the process of refinancing is quite similar to applying for a new mortgage. The steps to refinance your mortgage as following; (assuming you are qualify for refinancing)
1. Check Your Current Mortgage Term
☑ Do check on your current mortgage whether it is still within the lock-in period.
2. Search Few Banks For Greater Deals
☑ Do evaluate all these deals and which of them are meet your objectives that you set earlier.
For example: If you’re plan to not to use the cash out funds now but later, you may need a flexi loan which allow you to save those funds into this account. However, it is require a longer lock-in period on mortgage loan.
3. Always Negotiate For Better ELR
☑ ELR is generally known as “Effective Lending Rate”.
☑ Do negotiate for a better ELR with bank should you wish to use the cash out funds now.
☑ Do compare all the banks offers before proceed with the decision making.
4. Sign Up And Enjoy
☑ Once you have decided which bank offer the best deals for you, you can then proceed with the sign up and enjoy the benefits that it given to you.
Do take note that, the borrower with a good credit history or credit score, refinancing could be a great way to convert a variable loan rate to a fixed as well as get a lower interest rate. While, if the borrowers with less than perfect, or even have a bad credit history, or being faced with too much debts then refinancing can be very risky for them.
Besides, as a savvy consumer (since you have read this article), will use the refinancing cash out funds to pay-off the outstanding debts of credit card or personal loan to enjoy potentially 3x or 4x interest savings.