What is Mortgage Refinancing and how can it help you save thousands of Shekels ?
At the moment mortgage interest rates are at one of the lowest levels seen in the last 20 years, so it is definitely worth looking into refinancing your mortgage.
Mortgage refinancing means paying your current mortgage back to the bank in full and taking out another mortgage at a better interest rate and better terms. You must also take into consideration that some mortgages have an early repayment penalty that needs to be paid back as well.
One must ensure that the new mortgage rate and terms are better than the current mortgage including any repayment penalties.
For example if you have a
Current outstanding mortgage – 900,000 shekels
Early Repayment Charge – 30,000 shekels
Total End Mortgage payback – 1,800,000 shekels
so if you take out a new mortgage of 930,000 shekels and find a new mortgage track where you have to pay back 1,600,000 shekels that would be an example of a good mortgage refinancing where you will save 200,000 shekels.
Mortgage refinancing can be done by finding a better rate with your current bank or one can get a new deal from a new bank.
The following are different forms of Mortgage Refinancing
Lowering the monthly payment – This method consists of lowering the monthly mortgage payment over the same time period.For example if your current mortgage monthly payment is 4500 shekels and you manage to refinance to 3800 shekels per month you are saving of 700 shekels per month. If you have 20 more years to pay off the mortgage you will save 700 x 12 months = 8400 shekels x 20 years. A total saving of 168,000 shekels.
Increase the term of the Mortgage – If you are struggling to pay the monthly mortgage rate another option would be to increase the term of the mortgage. For example ff you currently have a mortgage term left of 15 years, and are paying 5000 shekels per month, you could increase the term for another 10 years and then only pay 3000 shekels per month for the next 25 years, allowing you to pay less money every month.
Decreasing the term of the Mortgage – For example if you currently have a term of 20 years left of your mortgage and are paying 4500 shekels per month , you can take advantage of a lower rate, by paying back the same amount of money but reducing the term from 20 years to 17 years. You transfer the interest saving to reducing the period of the mortgage.
So if you are paying 4500 over 12 months that will total 54,000. the original mortgage was 20 years so that was 1,080,000 total mortgage amount, but if we reduce the period to 16 years you would pay back to 864,000 a total saving of 216,000 shekels.
Borrow more money on the Mortgage – For example ff your property is worth 2 million shekels and your current mortgage is 850,000 shekels you are entitled to borrow up to 50% of the value of the property meaning you could borrow another 150,000 shekels ( as long as your income allows ) . If you take advantage of the current lower rates , you could probably borrow the extra 150,000 shekels and pay back the same monthly amount as you were paying on the 850,000 shekels.
ULTIMATE BEST MORTGAGE FINANCING
This is the dream way of mortgage financing. It is to try and merge all the above methods into one mortgage. Namely, to lower your monthly mortgage payment, decrease the term of the mortgage and borrow a higher amount. We will always try and get the maximum and best deal for our clients.
You can call us for a FREE no obligation consultation. Remember if we cannot save you money we do not charge
Call 052-765-0602 or email us at email@example.com