Pros and Cons to refinancing
09 October 2019
What is refinancing?
Refinancing your loan is always an option, whether you are trying to better manage your debts, or want to use the recent decreases in interest rates as an opportunity to shop around, but what is refinancing and is it all that it's cracked up to be?
Pros to refinancing
- Consolidating your debt - if you have multiple loans, it makes sense to consolidate them into one single loan, especially if you can get a lower interest rate. It’ll be easier to keep track of payments and loans.
- Lower payments - refinancing may lead to lower monthly payments on your loan. This might result in more comfortable cash flow and more money in your pocket for other monthly expenses.
- Different needs - chances are that when you got your original loan, your needs were different from what they are now. Refinancing may be the way to consolidate your debt, and provide you with a loan that meets your current needs.
Cons to refinancing
- Comparing loans and offers - who has the time? Even with sites like Finder or Compare the Market, you need to spend time to find a good deal that just right for you. Beware, some comparison sites sting you with a fee if you choose to refinance through their site. It may be is worth speaking to a mortgage broker or financial advisor when it comes to refinancing.
- Reset the clock - when you refinance, you often restart the clock and extend the amount of time you’ll take to repay a loan. When you stretch out loan payments over an extended period, you pay more interest on your debt. You might enjoy lower monthly payments, but the higher lifetime cost of borrowing can offset that benefit.
- Annual or service fees - it is essential to know what fees and charges are applicable during the life of your loan. These can add up, which could defeat the purpose of refinancing in the first place.
If refinancing doesn’t feel right, there are other options. FutureRent can provide you with the money you need without any of the refinancing woes. FutureRent provides landlords flexibility, with early access to their rental income. With FutureRent’s Rented product, you can get up to $55,000 rent upfront, with one fixed cost and no hidden fees and or charges. Without impacting your credit rating, you can get access to your cash upfront, so you can do all these things, without the need to sell a property or borrow money.Disclaimer: The information on this page is general information only and should not be taken as constituting professional or financial advice. FutureRent is not a financial adviser. You should consider seeking independent legal, financial, taxation or other advice to check how the information on this page relates to your unique circumstances. FutureRent is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by use of this website.