Most of the people don't know that take can change their loan to other investor; others are simply uninterested. They tend to be loyal with their very first lender but they don't know that such loyalty will 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. Below are some considerations when 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. Make a comparison between this offer and with offers from other lenders to see whether you should switch or stay put.
Lock-in and Clawback Periods
Lock-in period is when your lender give you a penalty if you want to fully repay your loan. Many housing loans have drawback period. This is when the lender will take back what they gave you when you get your housing loan. Lock-in period is different from clawback period. Because of this, reinvesting is not recommended.
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 current and reinvesting interest rates has to be larger for a relatively lower loan as fixed cost takes into a more significant 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. 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. However, if you are on floating rates, try to switch in fixed rates if the interest rates are increasing.
Own Financial Evaluation
If your financial state changed, consider reinvesting. Give some thought to take fixed rate package. Think of increasing your loan quantum. On the other hand, if your monthly income has increased and you want to lower interest payments, think of reducing your loan tenure. - 29970
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. Make a comparison between this offer and with offers from other lenders to see whether you should switch or stay put.
Lock-in and Clawback Periods
Lock-in period is when your lender give you a penalty if you want to fully repay your loan. Many housing loans have drawback period. This is when the lender will take back what they gave you when you get your housing loan. Lock-in period is different from clawback period. Because of this, reinvesting is not recommended.
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 current and reinvesting interest rates has to be larger for a relatively lower loan as fixed cost takes into a more significant 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. 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. However, if you are on floating rates, try to switch in fixed rates if the interest rates are increasing.
Own Financial Evaluation
If your financial state changed, consider reinvesting. Give some thought to take fixed rate package. Think of increasing your loan quantum. On the other hand, if your monthly income has increased and you want to lower interest payments, think of reducing your loan tenure. - 29970
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