What Is Refinancing?
Home refinancing is one of the most effective ways to release cash, reduce monthly expenditure and improve your financial position. Refinancing is the process of obtaining a new mortgage, under different terms, in an effort to reduce monthly payments, lower your interest rate, take cash out of your home for large purchases or change mortgage companies..
How Does It Work?
When you refinance, you secure a new mortgage for your property based upon its current value, not the original value you purchased your home for.
How Do You Apply?
You need to have owned your home for anything between one to three years. Having a perfect credit history also doesn’t hurt and can result in the conversion of a variable loan rate to a fixed one in order to obtain a lower interest rate. Most people will decide to refinance when they have equity.
• Better interest rate
• Consolidate debts
• Reduce monthly repayment amount
• Reduce/alter risk (variable to fixed loan)
• Free up cash
What is Equity?
Equity is the difference in value between what you owe on an asset and the value of that asset. It is, ultimately, a line of credit extended by a lender at a certain interest rate.