Mortgage Refinancing Essentials

“A home is an investment,” so the old saying goes. Despite what neo-economists may say, it’s true – a house which you call home definitely is an investment. It may not pass off as a blue-chip investment with insane returns anymore, but depending on how you look at it, it can make for a very comfortable retirement and that’s just one of many ways of looking at it.

A home services one the most essential of basic human needs – having a roof over your head and between the Millennials who are still living in their parents’ basements today and the working-class labourers whose weekly or monthly rental payments suggest that they’re not planning to invest in the ownership of their own properties any time soon, there are a select lucky few home owners who have the option of refinancing their mortgages to help them through some financial challenges.

Refinancing your mortgage isn’t an option only available to you if you’ve fully paid-off your home. You can also refinance to in effect take advantage of the lower repayment rates which come as a result of extending the period over which you’re going to pay the mortgage back. The longer the repayment period, the lower the repayment rates, generally, which are tied to bank-lending interest rates. This could free up a lot of cash for some of life’s other essentials, otherwise the main reason people choose to refinance their mortgages is so that they can have access to some immediate cash.

Depending on your credit rating and other indicators such as the value of your house, there are plenty of different options available to anyone looking to refinance their mortgage. It’s all about choosing the one which works out best for you financially though.

Fixed-Rate Mortgage

For any budding homeowner who’s actively paying off their mortgage, they’d be made aware of the option to refinance, especially in the UK since fixed-rate mortgages spread over a much shorter period of around 2-5 years, as opposed to periods of between 15 and 30 years in the US. This offers the type of flexibility which allows you as the borrower to even change lenders, in addition to committing to different repayment terms as per the end of each fixed-rate mortgage term.

Standard Variable-Rate Mortgage

Standard Variable-Rate (SV-R) mortgages can come in handy to offer the most value in financial relief to those who are experiencing longer-term financial difficulties. What it essentially means is that you can vary your repayment terms, often independently of bank-lending interest rates and more in line with your own financial situation, but then that also means the bank (your lender) can do the same as the repayment terms have to be agreed on by the lender. It pretty much all comes back down to your credit worthiness again, but if you’re in the process of paying off a home, then chances are you have good credit rating or credit score.

Some of the other mortgage refinancing options made available by banks (lenders) are in a sense just modified, tweaked and tailored versions of fixed-rate and variable-rate mortgages and depending on how they fit in with your financial needs, they can really work out to your advantage if you’re seeking to refinance your mortgage.

Katie Sanderson

Katie Sanderson

Katie Sanderson is a keen financial ninja who has made it her goal to help and advise people on all aspects of saving and generally helping with their day to day budgetary needs.When not thinking about saving she can be found at home with her family or out with friends.
Katie Sanderson
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