How to Remortgage and Release Equity
There are many homeowners out there who have equity in their home that they may want to use for other purposes. Whether you’re looking to purchase a new car, pay off bills, or finance a business venture, it’s important to understand how remortgaging and releasing equity works so that you don’t find yourself stuck with no way out. Some mistakes can truly lower your ability to remortgage and release equity from your home!
Putting off the decision to remortgage: It’s important that your monthly payments are lower than your mortgage, and it’s possible to find an even better option by remortgaging. For example, if you’re currently making $1200 per month in a 30 year loan with at least 20% equity (a $240K home), you could get into a 15 Year Fixed Home Loan for as little as .25% down payment ($12500) or a Remodeler Mortgage of just 0%. This would help reduce your monthly payments significantly!
Thinking that you can’t remortgage: You may think that your loan balance is too high, but it’s important to compare the different options available so you don’t miss out on a great opportunity! It all depends on what type of home loan works best for you and how much equity you have in your home (20%+, 30%, 50%+).
Choosing the wrong date when refinancing: The most common misconception about mortgages is choosing the wrong date when refinancing.
Not getting pre-approved for a new mortgage: The key to successfully remortgaging and releasing equity is getting pre-qualified so you know how much money you have available! Your lender will help determine whether or not your loan balance makes sense before proceeding with the process of refinancing.
Choosing an adjustable rate home loan when it’s unnecessary: If interest rates aren’t expected to rise, then this can be a great option if your current fixed rate expired without being renewed (or has increased). However, they are typically higher than “fixed” loans – meaning that there may be benefits in choosing another type of mortgage instead! It all depends on what works best for you and your lifestyle.