Is now the time to refinance? For those in the marketplace with mortgages not obtained in the last couple of years, it just might be.
With interest rates at record lows, and banks offering great fixed rates, it is at least worth considering refinancing to make use of the low rates. If and only if it saves you money.
Let's take a comparative example of a £1million mortgage over 25 years. With today's rates and rates from 10 years ago. Current offers are available for less than 1.5% (we will stick with 1.5% as an indicative example for current offers) in January 2007 rates in the region of 7.25%
On the example of 2007, your monthly mortgage payments would be £7,228 on a 25-year mortgage with a total payment of £2,168,421. With the current rates of 1.5% the same mortgage would cost £3,999 a month with a total mortgage cost of £1,199,809. That is a monthly saving of £3,229.
The above is just one example and it highlights the massive impact that refinancing could have on your own home or on investment properties you own.
Refinancing is not the best option for everyone, though now is a great time to re-evaluate the financial structure behind your investments or your home. It could save you a considerable amount of money, or perhaps drastically reduce the time remaining on your mortgage if you restructure to a shorter term. And for those interested in being debt free, that's always a bonus.
Always consider your options.
* Please note the above is not financial advice and we always recommend you seek financial advice from an authorised service provider, we are happy to connect you with one.
* Calculations made using a standard full repayment mortgage over 25-years.
By Rian Strauss, Founder Strauss Realty