Refinancing with a Flexible Home Equity Loan: Turn Your Mortgage Restrictions Into Money Savings

If you feel too constrained by your current home equity loan payment plan, it’s time to reconsider your opportunities.

Let’s look at the four ways your current home equity loan is holding you back:

1) You have restrictions on payments.

You simply pay the amount due based on your current debt and the interest rate you are holding.

2) You can have significant fluctuations in cash flow when during the year you have to bear large recurring and expected annual expenses.

This gives some problems in the cash flow of the period and shortage of money.

3) You have large cash flow fluctuations due to large annual expenses (for example, summer vacation).

Similar to the above but much larger in size. When this happens, and you know when it will happen, you simply need extraordinary effort in managing your finances.

4) Oh sure, you may be paying very high interest rates and just want better loan terms. But of course your current terms tie you to your current payment.

The two steps to a better way

1) Find a type of home equity loan that will give you more and allow you to overcome these problems.

2) Refinance your current home equity loan with the new one.

Well, if you suffer from “loan payment flexibility syndrome,” you’re in luck. In fact, there are now home equity loans that are designed to help you. They are the “Flexible Mortgage Loans”.

These are home equity loans that allow you to overpay to reduce debt (hence interest), underpay when you’re short (if you’ve overpaid before), and skip a payment in the year if your Previous overpayments have given you enough leeway. .

How are we going to replace our current loan with a new one? Well, refinance it, that is, request a new loan that pays the previous one with new terms. Therefore, it is a way to replace the old loan with a newer one, based on new contractual terms. It is important to take advantage of the new terms for three different points:

1) contractual flexibility (what you are looking for);

2) interest rate paid (for fixed-rate mortgages) or margin paid (for base-tracking principal mortgages);

3) lower costs.

So what are the 5 steps that allow us to do this?

1) Ask your current lender

Ask if they offer flexible loans and what can be done if you need more flexibility.

2) Research the market

As you can see, searching the market is essential when considering loans, as flexible loans, equity loans, and other loans change in rates. Search for lenders on the internet and keep track of their offers.

3) Take advantage of the market offer

Because home equity loans and remortgage loans are common, there are a variety of loans to select from, with most having their own variations. Understand the market offer and what makes them different.

4) Take advantage of market competition

Mortgage companies compete with each other and offer some of the best rates on the market. Take advantage of this market competition for lower interest rates and near-zero loan fees.

5) Close the deal

First, apply to your company for a refinance. Use what you’ve gathered in the steps above (ie, what your lender’s competitors are eager to do to you to get a new customer) to make your negotiation easier.

If your company is deaf, ask another company to offer better terms and use the new money to close the old debt with the old lender. Pay attention to the closing costs of the previous contract (there are usually penalties related to early termination).

now action

So, we have a new contract. Then?

1) Take advantage of overpayments to reduce the interest paid

Since flexible interest rate loans offer you the chance to overpay your mortgage, do so as soon as you can.

In fact, overpayments will reduce debt, so you’ll pay less interest no matter what happens to interest rates.

2) Take advantage of underpayments

If you have overpaid “enough” (according to the contract you have signed), then you can also “underpay” the mortgage, as long as you have made the minimum amount required and the number of payments.

3) Take advantage of the vacation package

Since these loans also offer “vacation packages” for underpayments, go for it! So if you pay off enough overpayments, you can suspend payments for a month to take a vacation. This will lessen the biggest cash flow problem we talked about.

Finally…

Flexible Rate Home Equity Loans are certainly a method of leveraging your resources to enhance your home equity loan. If you feel your home equity loans are too much of a constraint, take a look at this option.