Refinance is typically new loans with a lower rate of interest. The new loan could be contracted with the original bank or with a new one. Some reasons that attribute to a refinance could be as follows: interest rate of the original bank is too high, additional fees are expensive, unsatisfactory services and having difficulties in applying for a new loan from the original bank for a new property.
Fees to banks and government occur when the new bank pays off the loans to the original bank after the refinance loan has been approved. Most of the banks afford it. You may increase your loan amount, switch loan products and loan period during your refinance process if needed.
Pros of Refinancing
1. New bank provides better rates. You save more in a long term, which covers the fees you need when refinancing. Investors are provided with more choices with lower interest rates and higher loan amounts. A lower loan interest means that you pay less to the bank. A higher loan amount means a larger capital get from the bank. This is what a smart investor should consider.
2. Multiple valuations provide you more choices. Investor gets a larger loan from the bank that offers the highest valuation to the property. By comparisons, you may better understand the market value of your property. More flexible when repaying your principal and interests to the bank. It is the best option for investors who pay interests only because it ensures that they are able to re-invest wit
Cons of Refinancing
1. Fines apply due to early termination of contract with the original bank. ‘
2. Fees apply when re-apply with another bank include application fee and processing fee.
All in all, a property is more valuable by refinance than top up. Of course, selling the property would be to the best value of it.