Rising Tide Blog

The 3 levers of a refinance

Posted by Sam Gawenda

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I want to take you through the three levers that you can pull via refinance, to help get you through the current situation we all find ourselves in.

Lever number one is reducing your interest rate. The lower your interest rate is, the less your monthly repayments are, obviously lessening the cash flow burden that your loan has on you.

Lever number two is taking your loan term back out over a 30 year period. So at the moment you may have been in your loan for five years, meaning that you’ve got 25 years to run. Taking it, refinancing it back over 30 years means that the loan is paid off over a longer period of time, meaning that the monthly repayments will be less. You do need to consider that that may mean you pay more interest over the long term, but it could certainly help you out right now and ease some of that pressure.

Lever number three is increasing your loan whilst refinancing. I can’t stress the importance enough to my clients about having a ‘sleep at night account’. So, your ‘sleep at night account’ is a pot of money that just sits there. Hopefully you’ll never have to use it, but you know that it’s there to help you out if something happens in the world, or to your income. The ‘sleep at night account’ does exactly that – it helps you get a good night’s rest because you know that you covered at least for the short term.

So, all these three levers are possible through refinance, obviously on the proviso that you meet the banks criteria. Now, the really important thing is, the banks are still open for business. The banks are still lending money and there’s been no communication to say that that’s going to change any time soon. So, if you want to explore this further, follow the link, lock in time to chat and I’ll look forward to talking to you then.