How and when to refinance your home

How and when to refinance your mortgage

Playing the balancing game of trying to save money vs trying to grow your portfolio can be a mentally exhausting game. Finding the balance is an estimate made on a case by case situation. Anyone giving you a ‘rule of thumb’ idea or advice is guessing.

It is not going to be helpful for your situation to take advice based on pure speculation. This article will stay away from speculative ideas and instead focus on the process of refinancing your home and the material indicators of when you should do so.

Before taking the leap of marketing your situation to various banks in hopes of getting a better rate, you need to be in a relatively stable position. If you have a goal on refinancing, you need to be able to defend your reason for doing so to the bank and this is best done through a budget. It’s not enough to simply have one, you need to demonstrate to the bank that you can stick to it.

When you personal accounting is in order, you may want to make a few extra payments after refinancing to take advantage of the lower interest rates. You can make an affidavit to this effect in supporting documentation to the bank.

If you have been with your current interest arrangement for 18 months and have been prudent with your payments (as well as making additional payments where possible), it may be time to request a valuation of your property. The property valuation will help the bank ascertain the market value of our property.

You can increase you chances of being approved for refinance and getting your sought-after rate by:

  • Keeping up to date with your payments with your existing loan and making additional payments were possible;
  • Having a budget and sticking to your budget, creating a buffer of savings outside of your existing commitments;
  • Providing an affidavit to the bank explaining that you will make additional payments when approved for the lower interest rate; and
  • Getting a valuation on your property within 18 months.

After you have done so, you are likely to get refinance on your home. If you do not get the rate that you are after do not be afraid to shop around.