Is the Cost of Refinancing Your Home Really Worth It?
Prior to refinancing your home, it’s imperative to take a hard look at the certain factors, which will reveal whether it’s a wise decision or not. You need to rethink about your decision to look for refinance mortgage loan from singapore companies after you have weighed these factors one by one. Here are the details for your perusal.
The Break Even Point
No refinance is devoid of a breakeven point. There has to be a certain point in time when the costs of refinancing the loan will be equal to the savings. That’s why you need to find out the time that it will take for the refinance to break even. To do this, you need to divide the closing mortgage costs by the savings that this fresh mortgage will fetch you every month. This will give you the breakeven point and then you will be able to figure if your decision to opt for a Singapore refinance housing loan is wise or not. For instance, if you find that the fresh numbers are not going in your favour and your existing loan is more suitable for you, then you should shelf the plan to refinance. Also, if you do not have any plan to use that property beyond the breakeven point or period, there’s simply no reason why you should refinance.
Use the mortgage refinance calculator
Here is an app that will make it easier to calculate the mortgage refinancing amount before you look to get a refinance home loan from companies in Singapore. Key in the appropriate field with the rate of interest you are paying at present, your total amount of payment every month and the approximate terms of the new loan. The app will do all the calculations for you and reveal the comparative costs of the two mortgages to help you take the right decision about going ahead with the refinancing plan or abandoning it.
Consider the factor fees
Do not forget to calculate the factor fees. You need to keep in mind that refinancing mortgage is an expensive affair and you will have to bear the brunt of it for a considerable period. Hence, for an adequate financial cushion, it might backfire, putting you in all kinds of financial doldrums. As a result, you need to take into account certain costs that you will have to bear, in addition to the monthly payment plus interest.
– The mortgage conveyancing fee may vary between S$2500 and S$3500
– Valuation Fee that is generally couple of hundreds
– Insurance fee
Take the term of the new loan into consideration
Even if you compare mortgage loan rates while refinancing and switch over to a lender that gives you a loan at a lesser rate, you need to consider the terms of the new loan that you are about to take. Before you go ahead, it is extremely important that you properly calculate the breakeven point of the new loan. You also need to consider all the overall costs along with the entire amount of interest that you have to pay due to your existing mortgage. Then, compare the fresh loan and the rates. You can determine after that whether refinancing will be financially sensible or not.
Refinancing is not easy. You need to consider all these factors, discuss them in details with your advisor before deciding whether the cost of refinancing your private property or HDB flat is worth it.