House Loan Refinancing
If you currently are paying back a loan on a house, then you might be thinking about refinancing. You here this term a lot, but few people ever talk about what it really means. Well it simply means taking out a different loan on your house, preferably one that’s going to have way more favorable conditions then the last one.
You can choose to borrow money from the very same lending institution you borrowed from last time, or you can decide to go with another bank altogether. Going with a different bank altogether is usually the preferred option, because the bank you’re currently under a loan with might not be willing to offer you the most attractive terms.
With another bank they might see that you’re a good risk due to another bank taking a risk on you and they’ll decide to offer you better terms to get you under a loan with them. You would have to take the time to carefully explore these options though. It would also be a good idea if you made an effort to speak with your current bank first before agreeing to a housing loan with another bank. In a lot of cases you can use the other bank offering you better conditions as leverage to get what you want from your current bank.
Here are some of the primary reasons why some borrowers might seriously want to consider looking into refinancing their homes. You’ll need to make sure that your loan is in good standing with the bank though; otherwise it’s going to be tougher to do this.
- The primary reason why someone would want to refinance is because they’re in a situation where they need to create more cash flow. More cash flow would mean having more money on hand to not only pay bills and other expenses, but maybe to have more recreational fun. Refinancing can offer this by means of loosening up the total amount of the monthly payment a borrower has to make on a housing loan.
- Sometimes the main goal is not to get cash flow, but simply to lower the amount of the monthly payment being made. One good reason for this can be because there’s been a change in the income of a borrower. A borrower might realize that in order to keep up with payments they have to find a way to lower it. Refinancing can make this possible and serve as a form of risk protection against missing a monthly payment altogether. Missing payments or even being late can lead to fees and an increased risk profile.
- Some people might have been given longer loan tenure at one bank and are now being offered shorter loan tenure at another bank. They see that if they are able to get into a different loan, then this is going to save them a lot on total interest they have to pay. Refinancing makes it easy to do this, but understand that a borrower still has to qualify and be in good standing with the current lending institution they’re at.
- The value of the home has gone up and in this case a borrower sees if they are able to refinance, then they can use the additional money to pay for all sorts of expenses. Refinancing can provide extra money in this case to help pay for kids schooling, repairs a house might need or just put extra money into a person’s bank account.
Refinancing is the same in the Malaysian market in terms of what it means as it is anywhere else in the world. The goal is to get a loan with better terms and conditions if you qualify whether it by at your current bank or another one.