Home Loans

Instead of applying for a larger loan to consolidate all your debt, consider refinancing your existing mortgage. Refinancing your mortgage sees you replacing your existing bond with either the same or a new lender for a reduction in repayment amounts or to release home equity funds. A better interest rate decreases your monthly repayments, which eases the burden of debt you find yourself in, without having to take out a consolidation loan or apply for debt counseling.

Refinancing also enables you to convert equity that you have tied up in your home, into cash. If the value f your property has increased or if you’ve already paid off a large percentage of your mortgage, you can refinance to liquidate home equity, which is the equivalent of taking out a loan at a much lower interest rate.

Should you apply for refinance? Consider the following.

Loan agreement
Your loan agreement you have with your financier will stipulate if you’re allowed to apply for refinance and what the penalties are. Penalties are usually in the form a fee or a waiting period. Whichever is the case, make sure your refinance is still a saving afterwards.

Costs involved
Calculate how much you will pay the lender in initiation, legal and valuation fees. This is usally between R1,000 and R5,000. This is deducted from the loan amount.

GPF Consultant
A GPF consultant will be able to provide you with comparisons of interest rates from various lenders. Determine whether this interest will yield savings and if these savings are worth the cost of refinancing.

Apply for refinance
After you’ve determined whether it’s worth it or not to refinance your home, apply for refinancing. A good GPF consultant should provide you with a pre-qualification and negotiate a discount on your registration fees. After your credit checks out, the new lender will approve the refinance and a lawyer will contact you with the registration.