A refinance could be the best move you can do to save money and lower your current mortgage costs. A refinance is the simple act of replacing your current home loan with another home loan that works better for you.
There are many reasons why you might want to do a refinance. We will go over most of the different possible scenarios that we have seen with our clients in the UAE. We will assess all the benefits you might reap from a refinance. We will also address all the costs involved with a refinance. Hopefully this cost-benefit analysis will help you make the right decision.
Why refinance ?
Refinance to pay a lower interest rate
Let’s say you took on a mortgage with a fixed rate of 3.25% for the first two years. You are now one month before the two year limit is about to end. You find that the revert rate, or your new rate, will be around 5% - depending on the EIBOR, subject to further increase as the EIBOR might grow.
This might be a great case to look for a refinance, you can jump to another mortgage that might have a similar interest rate of 3.25% and extend your fixed period from two years to a total of four years. This could mean enough time before you intend to sell your property.