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Refinancing
If you are
looking to refinance your current mortgage you will probably be doing so
for one of three reasons; to consolidate debts, to reduce your
interest rate or to get equity out of your home. We will deal with
each of these issues separately. The underlying message is to seek
out professional advice because your situation is unique and it
needs a unique solution!
Debt Consolidation
Refinancing your mortgage to pay off other debts can save you money.
If you are perpetually carrying large credit card balances, or have
other high interest rate loans, it may make sense to consolidate
these debts into your mortgage. Not only will you reduce the
interest rates you are paying but you will also improve your monthly
cash flow.
You can refinance these debts several ways. You could consolidate
all your debts into one big mortgage, just add a small second
mortgage or even a secured line of credit. The route you take will
depend on your particular situation.
Reducing Your Current Interest Rate
If you are locked into a high rate mortgage you may want to break
your current mortgage contract and renegotiate a new mortgage with a
lower rate. The first thing that you should realize is that unless
your mortgage contract specifically allows for this, your current
lender is under no obligation to allow you to renegotiate your
mortgage rate. Having said this, most lenders will allow you to
prepay your mortgage. You should
begin by finding out what your lender will charge you to renegotiate
your mortgage rate. Once you determine the penalty, then you can
begin to calculate the potential benefits of a lower interest rate.
Alternativly we can renegotiate for you.
Equity Take Out
Many Kiwis choose to refinance their mortgage to finance a new
addition, for an investment opportunity, to help their kids buy a
home, to finance a new business etc. Each situation is unique and as
such advice on how to structure such a transaction is unique to the
individual.
Bottom Line
When it comes to refinancing there can be many ways to structure the
same transaction and you need to know all your options before you
can make an informed choice.
When you are ready to make an informed choice just let us know.
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