Looking for the perfect mortgage? When to refinance your home

Collapsing a mortgage before the end of the term is normally quite expensive. When collapsing a mortgage, most financial institutions will require the equivalent of several months of interest as a penalty.

However, for those considering a mortgage transfer, many institutions offer them at no fee, will cover a substantial portion of the legal, appraisal and administration costs and some will even give you a cash bonus on transfer. What this all ads up to, of course, is the potential to profitably refinance your mortgage.

Mortgage refinancing should be considered on residential properties for one of three reasons:

i) to amortize your mortgage more quickly (to reduce interest costs);
ii) to exploit lower rates (to reduce interest costs), and;
iii) to cut your monthly payments (which may or may not save you money).

Obviously, if your aim is simply to trade down to a lower rate of interest, shop the institutions for the best rate or pick up a major Saturday newspaper and find the institutions that are offering the lowest rate.

Those of us with mortgages should always be aware of changes to the types of mortgages that are offered in order to determine whether mortgage refinancing would be a beneficial option. You should take the time to review your mortgage options on a frequent basis, instead of just when you renegotiate your mortgage at the end of the term. This will help you determine whether your mortgage needs have changed.

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