What are the Do's and Don'ts of Picking a Refinancing Loan?
A home refinancing loan is a popular form of consumer financing among British homeowners. Moreover, that's not without good reason. Refinancing one's mortgage allows a homeowner to take advantage of equity in order to get better rates and, where applicable, pay off other higher interest debts. However, not every refinancing loan is a good loan. The truth is that some lenders are better than others are for refinancing.
Refinancing debt of any kind can be a complex process with lots of hidden traps. We do not want you to fall into those traps, which is why we have put together this list of dos and don'ts for obtaining financing. We hope you find them helpful.
- Do Compare Lenders – Although it might be a hassle, it is very important to compare multiple lenders and loan products. Loan comparisons are just as important as comparing insurance, deals on cars, holiday packages, etc. You will never know that you are getting the best deal if you do not compare.
- Do Ask Questions – Many people get themselves into trouble by not fully understanding all the ins and outs of a refinancing loan. Nevertheless, just because you do not know something does not make you stupid. The truth is that you are not a financial expert. So ask lots of questions from lenders. Furthermore, do not accept a loan offer if all of your questions have not been adequately answered.
- Do Take the Time to Understand Vocabulary – The banking industry is one that loves to use technical jargon that most of us do not understand. It pays to know what banking terms mean so you can understand what you are being told. For example, learn about terms such as LTV ratio, representative APR, default, etc.
- Don't Assume – Never assume that the advertised rates and terms you find on a website are what you'll wind up with. The advertised numbers are just estimates based on the best possible circumstances. Be prepared to pay a higher interest rate and have less favourable terms than advertised. It is just part of the game.
- Don't Accept the First Deal – You should never accept the first deal that comes your way without comparing it against others. You can compare loan offers without applying by contacting individual lenders and asking for rates, and terms and conditions in writing.
- Don't Apply for Multiple Loans – Every loan application results in a check of your credit history. Furthermore, each credit check is recorded and goes against your total credit score. Therefore, it is best to apply for one loan at a time. Wait until you are rejected by the first bank before applying with the second.
- Don't Ignore Your Budget – Refinancing your home is only a good deal if you can afford it. If you cannot, you could very well end up losing your home in the event of default. Make sure your budget is in order before you begin the refinancing process. If it's not in order, you have no business borrowing money.
- Don't Lose Hope – Lastly, do not give up hope if you have been turned down for a refinancing deal. Do what you can to fix any existing problems and then apply again in the future. There are ways around just about everything. It just might require a little effort and patience on your part.
If you are considering a refinancing loan for your home, our advice is that you do plenty of research while also exercising caution. You can never be too careful when you are talking about a financing package that uses your house as collateral. As long as you are careful about the terms and conditions and the rates you accept, you should do very well with refinancing.
To save yourself the hassle and time of finding and choosing the best deal why not give our team of experts a call – Our professional advice is FREE.
Our team offer confidential advice regardless of your circumstances. We have access to a whole of market panel of top UK and specialist lenders and can find the best deals that match your personal circumstances in a few minutes. Our experts will help you compare the offers available side by side and if you are happy will use their insider knowledge of lenders criteria and underwriting policies to create and submit an optimised application on your behalf which will ensure the lender of choice reviews your case in the best light.
Just call our friendly team today – We don’t work for the lenders and your needs are our only goal.
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