The most common reasons to refinance your property is to enjoy lower interest rates on your mortgage or to extend or decrease the loan tenor. To fully make use of the equity in your home, you may even consider cashout refinancing. With the funds generated from the cashout, you can put them in an investment with a yield higher than the interest charged on the mortgage.
The key reason to get your home refinanced is always to exploit lower mortgage rates available in the market. It does not require the advice of a professional mortgage consultant for your to realise that it is time to refinance your home when you are currently paying 3.75& on your mortgage loan while available mortgage interest rates in the market are hovering around 1%.
The concept and strategy of cashing out on your home equity to invest in other vehicles is so obscure that there are people charging thousands of dollars for a seminar just to inform you of this investment option.
As a matter of principle, there is a growing trend of home owners who cannot bear the thought of servicing a $500,000 loan on a $1million property. To obtain a fairer value deal for their million dollar properties, these home owners rather use refinance cashout to get a 70% loan on the million dollar property. And put the extra cash into their business, other investments, or even another property.
In other words, $500,000 from the new mortgage refinancing loan goes to repaying the existing loan. The remaining $200,000 may be used to purchase investments like life insurance, collective investments, blue chip stocks, down payment for another piece of real estate, etc.
In the past year, you probably heard a lot of market talk on refinancing properties. This is hardly surprising as historically low mortgage rates have assisted many home owners on great savings through refinancing with lower monthly payments and better terms.
As the economy is picking up, low mortgage rates are not going to last forever.
By refinancing your home, you can change the structure of interest rates from floating SIBOR or variable rates to a mortgage with fixed rates. With the current low rates, you can even consider restructuring your mortgage to pay more on your monthly installments and save a lot of cash on interest rates.
If you are a home owner, it makes perfect sense to take responsibility of your mortgage loan and refinance to a better deal when the time and market conditions are right.
Find out what are your Singapore mortgage refinance options now.