CONSOLIDATION LOAN

Overview
Types of Refinance Loan

Overview

What Does It Mean to Refinance a Loan?

Loan refinancing refers to the process of taking out a new loan to pay off one or more outstanding loans. Borrowers usually refinance in order to receive lower interest rates or to otherwise reduce their repayment amount. For debtors struggling to pay off their loans, refinancing can also be used to get a longer term loan with lower monthly payments. In these cases, the total amount paid will increase, as interest will have to be paid for a longer period of time.

What is Loan Refinancing?

Refinancing a loan allows a borrower to replace their current debt obligation with one that has more favorable terms. Through this process, a borrower takes out a new loan to pay off their existing debt, and the terms of the old loan are replaced by the updated agreement. For example, debtor owes to Financial institution A and want to refinance the existing loan to another new Financial Instituition. Therefore a new letter offer will be issue by the new financial institution to offsets the Financial Institution A. Benefits of doing this will enables borrowers to redo their loan to get a lower monthly payment, different term length or a more convenient payment structure. Most Financial institutions who offer traditional loans also offer refinancing options. However, for products like mortgages/home loan and car loans, refinancing loans tend to come with slightly higher interest rates than purchase loans.

The primary reason borrowers refinance is to get a more affordable loan. A lot of the time, a refinance can lower the interest rate and monthly repayment. For example, a homeowner with good credit who took out a 30 year mortgage/home loan in 2010 would likely be paying an interest rate between 4% and 6%. Today, a better profile borrowers can potentially receive interest rates lower than 4%. Accordingly, that homeowner could save more on their interest rate by refinancing their loan, saving them and lower the monthly repayment.

Credit Cards

Personal loans are often used as a way to refinance credit card debt. Interest accrues rapidly on an outstanding credit card balance, and it can be hard to manage continuously growing debt. Credit card interest rates which is maximum 1.5%, which are applied monthly, also tend to be higher than personal loan rates. So, by paying off the credit card balance with a personal loan, debtors are likely to get a more affordable and manageable way to pay off their debt.

Debt Consolidation Loan

When you have a different loan facility to pay every month and some of the interest and repayment is higher, you may consider to consolidate all your loan facility into one loan facility. The advantages of doing this will save you monthly interest and lower monthly repayment on your existing facility. You may look out for one financial institution to consolidate all your loan facility and only pay to one financial institution instead of a few financial institutions every month. You can use your existing mortgage/home loan facility to do this debt consolidation. Talk to our experience consultant today.

Hire purchase Loans

Most car owners choose to refinance their loan to lower their monthly payments. If a borrower is in danger of defaulting on their debt, a restructured hire purchase loan agreement can be helpful for getting their finances back on track. However, banks usually have specific eligibility requirements for refinancing, including age of car restrictions, mile caps and outstanding balance limits. If you’re in financial distress and in need of a loan restructuring, it’s best to reach out to your loan servicer and communicate to them your personal financial situation. You may schedule for a restructure and rescheduling for a new monthly repayment and subject for your bank approval.

Small Business Loans

Refinancing business debt is a common way for many small business owners to improve their cash flow. Business owner who intend to reach out for a new loan which are for purchasing real estate and equipment, can also be used to refinance conventional property loans. Similar to mortgage refinances, switching into a different business property loan can often yield a lower interest rate and monthly payment. Business owners that have high debt also use debt consolidation loans to restructure their payment plan.

Refinance Home Loan

Getting a new home loan to replace the original is called refinancing. Refinancing allows you to pay less interest on your property and free up cash.

Wait! Free up CASH? Yes, here’s an example of how it works.

Original home value: RM400,000

Present valuation of your home value: RM500,000

Amount you still owe in your original home loan: RM300,000

You carry out refinancing for 90% of the present value of your home: RM450,000

Amount of CASH you free up for personal use is RM450,000-RM300,000 = RM150,000.

There are many other reasons why people want to refinance their home loan. How do you go about it? Let us know your problem and we’ll guide you with the best option.

REFINANCE TO CASH OUT

Refinancing is when you already owned a home loan in Malaysia and you would like to change to another bank loan without moving home. For this process you need to access to your latest market value for your property. If the market value is higher than your existing bank loan, you can cash out some money by doing refinancing cash out. Talk to us today and we will guide you on the process.

CHANGE OWNERSHIP

Changing the ownership can be done as below and is it still under mortgage loan.
1. From parents to children (vice versa)
2. Between spouses
3. Between siblings
4. Between business partners

CHANGE BANK

Are you currently unhappy with your bank loan interest or their services? You can opt to change to another bank loan, just tell us your frustrations and we will do our best to assist you.

DIVORCE

When you have a relationship breakdown and require financial planning on your home loan which is still under mortgage, we are here to help you.

How to Refinance a Loan

If you’re looking to refinance a loan, you should first examine the specifications of your current agreement to see how much you’re actually paying. You should also check if there is an early settlement penalty on your current loan, as the value of refinancing could potentially be outweighed by the early termination cost. After finding the value of your current loan, you can comparison shop between a few financial institutions to find the terms that best fit your financial goals.

Whether you’re looking to change term lengths or lower your interest rate, a variety of loan options are available on the markets today. With new online lenders looking to compete with traditional banks, there are services and packages tailored towards all financial goals. For the most qualified (good profile) borrowers, this competition can help cut the costs of a loan by hundreds or thousands.

What Are The Risks?

One of the major risks of refinancing your home comes from possible penalties you may incur as a result of paying down your existing mortgage with your new loan. In most mortgage agreements there is a provision that allows the mortgage/home loan to charge you a fee for doing this, and these fees can amount to thousands of dollars. Before finalizing the agreement for refinancing, make sure it covers the penalty and is still worthwhile.

Along these same lines, there are additional fees to be aware of before refinancing. These costs include paying for legal and stamping fees, there is also a need to incur a new valuation report, to ensure you are getting the most beneficial deal possible and handle paperwork you might not feel comfortable filling out, and bank fees. To counteract or avoid entirely these bank fees, it is best to shop around or wait for low fee or free refinancing. Compared to the amount of money you may be getting from your new loan, but saving thousands of dollars in the long run is always worth considering. We know it is not easy decisions to make but you can always engage a consultant to do the loan planning for you.

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