Disadvantages Of Refinancing

Refinancing works to Substantial Saving

Do current market conditions favors remortgage? Indeed, yes for most landlords it’s still an upright time to refinance.

Refinance or Remortgage is the process of replacing existing mortgage loan with a new mortgage. This allows a borrower to obtain a better interest rate or helps to take cash out of fully paid home for further more investment. There might be any reasons for homeowners to refinance, but it is essential for them to ascertain whether his or her object for refinancing offers true benefits or not. As without the right knowledge, the risk emanates in refinancing. Hence, referring a mortgage consultant for refinance could be an added advantage since they have an in-depth market understanding

It really makes sense to refinance your existing mortgage if your monthly payment and interest rates are getting lower. Or you can adjust your repayment amount by switching to a Fixed Rate Mortgage term from an Adjustable Rate Mortgage term or vice versa. Adjustable rate mortgage is good for those borrowers who are not planning to own their home for a long-term. It can provide initial lower monthly payment, but an adjustable rate mortgage is associated with the risk of market adjustment and can end up with the threat of rising interest cost. But fixed rate mortgage may sound more sensible option if you stay in your home for a long time. It helps to calculate your monthly overheads prudently and gives confident to know exactly what your payment will be every month for the set duration. One of the major advantages of refinancing is reducing interest rate as it can have a profound effect on monthly payments. Considering, your current mortgage outstanding of Dh1 million at the interest rate of 6 percent, if got refinanced at 2.99 percent can eventually save up to Dh1000 per

However, at present borrowers have greater flexibility as banks are proposing competitive offers in terms of refinancing to attract mortgagors from a different bank. And definitely, one should use this opportunity to reduce the mortgage cost and especially when banks are waiving the processing fee. Currently, many lenders are offering up to 75 percent refinance product on the property value.

In Dubai with the regulated mortgage guidelines, the refinance cost less than two percent of the loan’s principal amount which includes property evaluation, land department charges, title deed, bank charges and insurance cost to the mortgage borrower.

To start the process, banks need home buyers personal identification documents, personal bank statements and liability details along with other income documents. Similarly for equity release, banks will review property documents which includes a title deed copy, floor plan and if it’s a rented property then tenancy contract copy and rental payment details which are considered as borrowers one of the income sources. However, the equity release amount would be based on the current valuation of the property which is conducted by approved panel of the valuation agencies in the bank. The complete process requires two to three weeks’