Things to Consider When Reinvesting Your Home
Many people are unaware that they have the option of switching 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 bring 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
If your latest interest rate is higher than other housing loan packages, consider reinvesting. Ask your bank or financial institution to reprice your loan package. Your lender might give you an offer. Try to compare this offer to the other packages and then decide if you should switch or not.
Lock-in and Clawback Periods
Lock-in period is when your lender give you a penalty if you want 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 is different from clawback period. Thus, it is not advisable for you to reinvest due to these extra costs.
Loan Quantum
If the amount of your loan is larger, the savings for the same decrease in interest rates will also be also larger. Yet fixed cost to reinvesting does not vary much with quantum loan. The difference between your latest and reinvesting interest rates has to be larger for a relatively smaller loan as fixed cost consumes into a more considerable part of your interest rate savings.
Identify Interest Rate Movements
Your analysis on how interest rates are moving can be a factor when considering whether you should reinvest. Try a floating rate package as an alternative to fixed rate package if the interest rates are decreasing. However, if you are on floating rates, try to switch in fixed rates if the interest rates are increasing.
Own Financial Evaluation
Think of reinvesting when your financial states change. Try to get a fixed rate package. Consider increasing your loan quantum. When your monthly income increased and you want to decrease interest payments, try to reduce your loan tenure. - 23196
Latest Interest Rate
If your latest interest rate is higher than other housing loan packages, consider reinvesting. Ask your bank or financial institution to reprice your loan package. Your lender might give you an offer. Try to compare this offer to the other packages and then decide if you should switch or not.
Lock-in and Clawback Periods
Lock-in period is when your lender give you a penalty if you want 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 is different from clawback period. Thus, it is not advisable for you to reinvest due to these extra costs.
Loan Quantum
If the amount of your loan is larger, the savings for the same decrease in interest rates will also be also larger. Yet fixed cost to reinvesting does not vary much with quantum loan. The difference between your latest and reinvesting interest rates has to be larger for a relatively smaller loan as fixed cost consumes into a more considerable part of your interest rate savings.
Identify Interest Rate Movements
Your analysis on how interest rates are moving can be a factor when considering whether you should reinvest. Try a floating rate package as an alternative to fixed rate package if the interest rates are decreasing. However, if you are on floating rates, try to switch in fixed rates if the interest rates are increasing.
Own Financial Evaluation
Think of reinvesting when your financial states change. Try to get a fixed rate package. Consider increasing your loan quantum. When your monthly income increased and you want to decrease interest payments, try to reduce your loan tenure. - 23196
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posted by X - Men @ 7:22 AM
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