As mortgage brokers people will often ask “should I refinance my mortgage” and while it may seem a simple question there are often some considerations that may not be quite as simple.
We believe that there are some questions to be asked and answered before we can provide an answer.
Is Refinancing Your Mortgage A Good Idea Or A Bad Idea?
First you should think about why you are considering refinancing your mortgage;
- Often there will be what appears a very good reason that makes good financial sense – like lower home loan rates being offered.
- Other times it’s more of an emotional decision based on an experience with your existing bank.
Like many decisions in life there will often be some benefits to refinancing and some negatives to refinancing.
Three Common Reasons We Hear
We hear a lot of reasons but here are three of the most common reasons we hear;
I can get lower home loan interest rates with another bank…
We all want a good deal – not just now, but all of the time.
The problem is with advertised specials is they are not available all of the time.
A particular bank may be offering the best deal today on a specific loan term, but what happens when that loan term ends? Do we refinance the loans to another bank?
If we continue to chase the lowest interest rates then we would be constantly changing banks and there is always a cost to changing even if the bank does offer you some cash to offset the cost. Be careful if they do offer a cash incentive as most now have a requirement to be repaid if you leave that bank within 3-years. Of course the incentives are to lock you in as a bank customer fir as long as they can keep you.
Instead of a one-off special we want to be treated fairly by the bank.
Most Kiwis just want to know that they are getting treated fairly by their bank, and that is a good reason to use a mortgage broker too – to keep your bank honest.
My bank keeps changing my personal banker and I’m treated like a number
Banks are in business to make money.
One of the biggest costs for any business is good people – they cost money to recruit, to train and to retain.
Banks are trying to automate their processes so they can avoids having to hire good people and more importantly to reduce the cost of staff.
Good staff tend to get promoted and the poor staff are left to attend to the banks customers.
That leads to good customers (you) leaving the bank, and as mortgage brokers we will happily look after you for many years.
My bank said “NO” when I needed them
It is common for a bank to say NO when they should take some more time to understand the request and find a way yo say YES.
Often one bank to not allow you to do something while another bank is quite happy for the same thing to happen.
There are times when we have some problems or go through a ‘bad patch’ and that is when we may need our banks support the most. Unfortunately your existing bank might not be as helpful as they could and therefore starting a new relationship with a new bank might then be the best thing to do – this means refinancing your mortgage and shifting your banking.
This is not out of the ordinary – you need the bank and they say NO.
Mortgage Brokers Can Help
As mortgage brokers we have helped a lot of people to both get what they want from their existing bank and also to refinance mortgages to other banks.
Everyone will have a different reason for wanting to refinance their mortgage, and sometimes there will be complications.
What we do is have a look at the total situation before jumping to a decision.
Refinancing your mortgage … it may be a good idea or a bad idea.
We offer advice to help you decide if it is a good idea.
