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| Mortgage Refinancing |
This is the process of combining several debts such as
credit cards, personal loans and other unsecured debts
into your existing mortgage. Mortgage rates are lower
than those of loans, so your total monthly repayment will
be lower than before mortgage refinancing.
To refinance your mortgage you must have equity in your
home, which means the value of your home is higher than
the amount of money you owe to the bank. Many banks will
only loan up to a certain percentage of what your property
is worth.
You can consolidate all of your existing debts into your
mortgage with lower total repayments and lower interest
rate if your credit rating is clear, no defaults.
If you have a fixed interest rate mortgage you will have
to change to a mortgage with variable interest rate. Refinancing
your home takes about 6-7 weeks, it varies from bank to
bank.
Below is an example of mortgage refinancing:
Before
mortgage refinancing there are 6 different
loans each month.
| Type of loan |
Remaining to pay |
Interest rate |
Monthly repayments |
| Home Loan |
$150,000 |
6.9% |
$1051 |
| Car Loan |
$20,000 |
9.0% |
$415 |
| Credit Card 1 |
$9,000 |
16.5% |
$240 |
| Credit Card
2 |
$6,000 |
14.0% |
$200 |
| Personal Loan 1 |
$19,000 |
12.5% |
$427 |
| Personal
Loan 2 |
$15,000 |
14.0% |
$349 |
| TOTAL |
$219,000 |
-- |
$2,682 |
After
mortgage refinancing monthly payments
are reduced from $2,682 per month to $1,633
per month. Saving $1,049 each month.
|
| Type of loan |
Remaining to pay |
Interest rate |
Monthly repayments |
| Home Loan |
$219,000 |
7.6% |
$1,633 |
| Savings per month |
$1049 (Every
month extra $1049 in your pocket.) |
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