facebookGiven that there are lower interest rates now, is now the time to refinance and cut down the loan that I have to pay per month? - Seedly

Anonymous

20 Jan 2021

Property

Given that there are lower interest rates now, is now the time to refinance and cut down the loan that I have to pay per month?

Are low-interest rates an indication of a good time to refinance?

AMA Mortgage Master

Discussion (1)

What are your thoughts?

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Yes, please refinance! If you can save money in the long-term by refinancing, it really is a no brainer.

However please take note of the following first (or let Mortgage Master check it for you):

  1. Are you out of lock-in period? If you are still within the lock-in period, there may be a penalty when you refinance.

  2. Is there any clawback clause or other penalties in your current home loan? As with the lock-in period, refinancing may not be worth the upfront cost.

  3. Is the NETT savings from refinancing worth the hassle?

Here's what I mean:

A = Difference between current instalment vs new installment

B = Bank legal subsidy and rebates

C = Legal fees and valuation fees

If A + B C, then you should refinance

If A + B < C, means you should not refinance

If A + B C but the difference between the two is too insignificant, then it's probably not worth the extra effort of refinancing

Still unsure? Hit us up at our website and we will do the math for you =)

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