- Blog
If you have been living comfortably in your own home for years, it might be time to look into refinancing your mortgage. In short, this means; you pay off your current, current mortgage and replace it with a new mortgage.
There are several reasons to do this, such as trying to get a lower mortgage rate or shortening the term of the mortgage. It can be advantageous, but this is not always the case.
So don’t just go for it, but find out first whether it is worthwhile in your specific situation. In other words, whether it will save or cost you money.
Have no idea what to look out for? We discuss below when is the right time and what steps are best to take then.
What is the best time to transfer?
The best time to transfer can depend on several factors.
It may be interesting if mortgage rates are low, the terms are better with another party, if the penalty for refinancing is not as bad and, of course, if it is a combination of two or three of these factors.
There are several possibilities that could lead to a positive outcome.
Switching at a lower mortgage rate
A lower interest rate is the main reason for many people to transfer their mortgage.
Has the mortgage interest rate dropped in recent years? If so, it is probably now lower than when you took out the mortgage. In that case, you are paying unnecessarily high interest rates.
To make the mortgage cheaper, in this case you choose to refinance. You then transfer your mortgage to another lender. You take advantage of the interest rate at that time. This can save you a lot of money at the end of the day.
Switch with better terms
Refinancing can be interesting when interest rates are low, but you can also choose to refinance because of the interesting terms.
Perhaps the terms and conditions with another lender are a lot better than with the current party you took out the loan with. These might include the ability to make additional penalty-free repayments, taking the mortgage interest with you when you move or automatically adjusting the risk class.
It can be difficult to determine if the terms and conditions at another mortgage lender are really better than the current one.
This is why we advise you to hire a good mortgage advisor. Discuss with the mortgage advisor whether it is interesting to transfer your current mortgage. They can calculate for you whether or not it is worth it and whether it will save you money.
Such a specialist can inform and advise you on how to refinance your mortgage, ultimately allowing you to make a better choice.
If mortgage refinancing penalty is not as bad as it should be
Does it seem interesting enough and you want to refinance your mortgage? Then you usually have to pay for this.
In fact, with almost all lenders, you will incur a penalty when you refinance your mortgage. This is because when you took out your mortgage, you fixed it for a certain period of time and at a certain interest rate.
This way, the lender is guaranteed income from the interest over this period. When you refinance your mortgage early, you usually get a penalty to make up for the money they lose.
Because of this penalty, you may think that refinancing a mortgage is not interesting. Yet this may well be the case.
Is the current interest rate significantly lower than when you took out your mortgage? Then you will probably save a lot by switching your mortgage. You may even save so much that you can easily pay the penalty from this.
When this is the case, it is interesting to refinance a mortgage.
Mortgage2Go
Do you have certainty about what you can borrow maximum for a mortgage and want to get the financing just about right before you start house hunting?
Then Mortgage2Go offers the solution. You will be financially checked in advance and your financing is already virtually complete. So you know for sure that you can pay for your dream home.
Within two business days of your accepted offer, your financing is then complete and finally approved!
Start an application for a pre-checked mortgage and see if you qualify.
