Refinancing Your Home Loan

by By KH Ng

With the present global economic situation, most people are seeking to lower their bills from home mortgages to personal credit cards. As home mortgages is one of the most expensive investments for any individual and its long time nature, refinancing home loans may be the best option to reduce these debts and make living a little easier.

What is home loan refinance? It is a new loan taken out by a borrower to pay off the original loan; usually done with better interest rates or terms. Currently, low interest rates have created a mortgage refinance boom. With the significantly reduced rates, the decision to refinance is “cherry pie” for homeowners.

By refinancing your home loan, you can get extra cash by taking advantage of your property's appreciating value to obtain a longer loan amount. In a nutshell, the refinanced loan pays off your current home loan and you can utilize the balance to fund whatever you wish.

If your home loan is more than several years old, it is likely that you are servicing your loan at a higher interest rate than what is on offer by financial institutions today. What may have been the proper loan and payment plan many years ago, may no longer fit an individual's current circumstances.

However, with the many competitive home loans products available in the market today, especially one that will cover any refinancing costs, exploring refinancing makes good financial sense at any point in the tenure of your home loan. The following are several good reasons why home owners would benefit from switching their current loan to a new loan with lower interest rates: -

• A lower monthly repayment.
• Save thousands of ringgit on interest.
• Reduce your term and pay off your mortgage earlier.
• Convert your equity to cash.
• Cash-out options will allow you to finance your children's education and also
to fund your business or investment.
• Switch from conventional housing loan with variable rate to a fixed rate loan or
Islamic Loan (or vice versa).


If home mortgage refinance is the best way to save money and avoid high monthly repayments, then it is important to do a proper research to secure the best refinancing loan packages and get a good understanding of any hidden costs in any home loan products. Certain refinance options contain transaction fees and other penalties for early payment. These plans should be avoided at all cost. This will only defeat the purpose of the refinancing and restructuring process by making a bad decision. The last thing an individual needs is to embark on a financial journey which is worse than before.

Hence, considering refinancing your home loan could be a worthwhile effort to save your hard-earned money and give the financial independence you so crave for in this time of uncertainties.

(source:http://www.starproperty.my/PropertyGuide/Finance/212/0/0)