Most of the people don't know that take can change their loan to other investor; others are simply uninterested. They simply become firm with their first lender but they don't know that it could nring higher interest rates. Because of increasing number of housing loans and amortization period, the interest can range from thousands to hundreds of thousands of money. The following factors may help you consider reinvesting your home.
Latest Interest Rate
When your current interest rate is higher than available housing loan packages on the market, it is time for you to consider reinvesting. Ask your bank or financial institution to reprice your loan package. Most likely, your lender will give you an offer, which is better than your current one. Try to compare this offer to the other packages and then decide if you should switch or not.
Lock-in and Clawback Periods
When you get a housing loan, there may be a lock-in period wherein your mortgage lender will charge you a penalty fee, maybe a percentage of your outstanding loan amount, if you were to fully repay your loan. Most of housing loans have a clawback period wherein the lender will claim back "giveaways", such as legal subsidies, that they "gave" you when you take up your housing loan. Lock-in period and clawback period are different from each other. Because of this, reinvesting is not recommended.
Loan Quantum
The higher the amount of your loan, the greater your savings for the same decrease in interest rates will be. However, fixed cost to reinvesting, which comprises mainly of legal fees, does not vary much with loan quantum. The difference between your current and reinvesting interest rates has to be larger for a relatively lower loan as fixed cost consumes into a more significant part of your interest rate savings.
Distinguish Interest Rate Movements
Your analysis on how interest rates are moving can be a factor when considering whether you should reinvest. If you are currently on a fixed rate package and believe interest rates are dropping, you may want to reinvest to a floating rate package. Conversely, if you are on floating rates and believe interest rates are increasing, switching to fixed rates may be a good choice.
Personal Financial Evaluation
Try to get a fixed rate package. Think of increasing your loan quantum. When your monthly income increased and you want to decrease interest payments, try to reduce your loan tenure.
Latest Interest Rate
When your current interest rate is higher than available housing loan packages on the market, it is time for you to consider reinvesting. Ask your bank or financial institution to reprice your loan package. Most likely, your lender will give you an offer, which is better than your current one. Try to compare this offer to the other packages and then decide if you should switch or not.
Lock-in and Clawback Periods
When you get a housing loan, there may be a lock-in period wherein your mortgage lender will charge you a penalty fee, maybe a percentage of your outstanding loan amount, if you were to fully repay your loan. Most of housing loans have a clawback period wherein the lender will claim back "giveaways", such as legal subsidies, that they "gave" you when you take up your housing loan. Lock-in period and clawback period are different from each other. Because of this, reinvesting is not recommended.
Loan Quantum
The higher the amount of your loan, the greater your savings for the same decrease in interest rates will be. However, fixed cost to reinvesting, which comprises mainly of legal fees, does not vary much with loan quantum. The difference between your current and reinvesting interest rates has to be larger for a relatively lower loan as fixed cost consumes into a more significant part of your interest rate savings.
Distinguish Interest Rate Movements
Your analysis on how interest rates are moving can be a factor when considering whether you should reinvest. If you are currently on a fixed rate package and believe interest rates are dropping, you may want to reinvest to a floating rate package. Conversely, if you are on floating rates and believe interest rates are increasing, switching to fixed rates may be a good choice.
Personal Financial Evaluation
Try to get a fixed rate package. Think of increasing your loan quantum. When your monthly income increased and you want to decrease interest payments, try to reduce your loan tenure.
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