What Mortgage Refinancing Means
Refinancing is the process of paying off an existing loan with a new one. Some mortgages may be eligible for the Financial Services Commission’s loan refinancing infrastructure, but not every property or loan qualifies. Check your eligibility and limit in the service information available when you apply and through the lender’s review.
Don’t Decide Based on the Interest Rate Difference Alone
The interest rate difference that works in your favor varies from person to person. A small difference can matter when the balance is large and the remaining term is long, while you may not recover the fees if you plan to pay off the loan soon. Fixed-rate and variable-rate loans carry different risks, so compare not only the advertised rate but also the rate adjustment cycle and reference rate.
Calculate the Break-Even Point
Add the actual quoted costs, including the early repayment fee on your current loan, stamp duty on the new loan, and collateral-related expenses. Divide that amount by the monthly interest savings or monthly payment difference from the new loan to estimate how long it will take to recover the costs. If you only reduce the monthly payment by extending the repayment term, total interest may increase, so check the total amount repaid as well.
Numbers to Prepare Before Applying
First check your current balance, applicable interest rate, remaining term, repayment method, and early repayment fee. Ask the new lender for the interest rate, loan limit, term, and additional costs both when you meet all preferential conditions and when you do not. Online comparison results may be estimates, so review the final loan agreement again.
The Review and Funding Process
The new loan will be reviewed again under the regulations in effect at the time and the lender’s criteria, including LTV and DSR. Having an existing loan does not automatically mean the same amount will be approved. Do not pay off the existing loan before approval and the funding date are confirmed. Confirm the release and registration of the mortgage lien, along with the existing loan repayment process, with the new lender.
Final Checks Before Deciding
In your comparison table, record the total amount repaid if you keep the current loan and if you refinance, using the same end date. Include the cost of maintaining preferential conditions, the possibility of higher interest rates, and your early repayment plans. If any cost is difficult to understand, it is best to confirm its amount and billing date in writing with the lender before signing.