What is Mortgage Refinancing & Why Should I Refinance my Mortgage or Home Loan?

When should you reprice remortgage or refinance your mortgage or home loan

What is Mortgage Refinancing?

Mortgage Refinancing is the replacement of an existing old debt plan with a new package provided by a new lender. A common reason why people refinance their mortgage is to take advantage of a better financing plan and hence lower their interest cost and monthly mortgage repayments. 

What is Remortgaging?

According to Wikipedia, remortgaging refers to the refinancing of your mortgage but in local context could also mean borrowing an additioanl new cash out equity loan on your property.

What is Repricing?

Mortgage Repricing is the renewal of your existing mortgage plan with your existing lender without changing banks.

When should I consider to refinance my mortgage or home loan? 

The typical period to start reviewing for the refinancing of your mortgage or home loan is about four months before the ending of your package tie-in or lock-in period. This could range anywhere from between one to three years depending on the contractual terms when you first signed up the loan. If you have opted for a no tie-in package, then considerations & reviews for the refinancing of your mortgage or home loan could start anytime once the benefits outweighs the cost.


In addition to the tie-in period, banks could have also provided you with some subsidies which are typically subjected to a three years claw back, hence if you have taken up the bank subsidies but is looking to refinance your loan in less than three years, then considerations for the claw back of subsidies if any should be taken into due considerations as well.

10 reasons why you should refinance your mortgage or home loan

 

1) Interest Savings
2) Extending your loan tenure to improve cashflow
3) Decoupling of your mortgage
4) Decoupling of the property ownership
5) Fractional/Part-purchase
6) Taking an additional term loan from the excess equity of your property
7) Changes in interest rate cycle – ascending interest rates (ex. changing from variable to fixed rates)
8) Change of package features and benefits (ex. Non-offset to an interest-offset mortgage)
9) Debt consolidation of secured and unsecured loans
10) Merging and consolidation of mortgage loans

 

 

Cost to note when you refinance your mortgage or home loan? 

Typical cost to note are legal and valuation fees which could range from between $2300 to $3500 and $300 to $1000 respectively depending on the type, transaction and value of the property and mortgage. Depending on the value of your outstanding loan, the takeover bank will typically provide a significant subsidy to help offset your cost. In many instances, our customers pay little to zero cost when they refinance their mortgage or home loan.

How does the refinancing of our mortgage or home loan works? 

> Contact Us
> Compare and review packages
Application
Approval
Acceptance of bank offer letter
Serve redemption notice to existing bank
Lawyer will contact you for follow ups on the necessary documentations to bring over the loan to the new lender.
Loan repayment starts with new lender the following month.

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