Refinancing

Refinancing means to replace an existing loan with a new loan. The new loan will cover what you owe on the old one, and then have different terms for you to pay off. But slightly better terms on their own might cost you more in the long run; refinancing isn’t as straightforward as simply finding a better deal and switching over. There are often several fees that you have to pay to break off a loan, which can quickly eat up the potential savings. So, when is it a good idea to refinance, and when should you stick it out? Our team has the answers! 

What are the advantages of refinancing? 

We recommend staying with your current bank unless there is an important reason to change. Three reasons when we commonly recommend refinancing include: 

  • You want money to do a debt consolidation or renovation on your property and the bank denied the money to do so. 
  • Your bank wants a valuation on your property
  • The bank is charging too much in fees
  • The person you dealt with at your bank has left the company and you aren’t a good fit with their replacement. 

Different banks will lend you a different amount depending on your income and how much debt you have. If refinancing can benefit your situation, we’ll look at other options to come up with a best fit solution.

What are the disadvantages of refinancing? 

The biggest disadvantage of refinancing are the fees that are involved, which are different depending on your bank and loan type. You’ll likely have to pay a break fee if you have a fixed-term loan and the current interest rate is lower than it was when you took out the loan. As part of our research, we can find out what these fees are and what the current rates are. However, the quotes we get are only good for the day we get them, as rates can change daily. Also, many banks will want you to move accounts and bank with them as well, meaning you’ll need to set up and open new accounts. 

When should I consider refinancing? 

You should only consider refinancing when it will save you money in the long term, including the break costs and any applicable legal fees. Since refinancing can also involving moving banks, another thing to consider is if you’re happy with your current bank. If you don’t like your bank because of their app, internet banking, high fees, or service, and you can save money by refinancing, then it’s probably something you should consider. 

To find out if refinancing is right for you, give us a call today. 

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