| The most common reason most people refinance is to | | | | money over the life of the loan. For example, |
| save money, but many people refinance for various | | | | refinancing from a 7-year loan to a 3-year loan might |
| other reasons. | | | | result in higher monthly payments, but the total of the |
| 1. Refinancing to Lower Your Monthly Payment for an | | | | payments (or total cost of the loan) made during the |
| Existing Loan. | | | | life of the loan can be reduced significantly. You'll also |
| You can refinance your existing loan at a lower | | | | be able to build up your equity faster. Use this free |
| interest rate thus reducing your monthly loan | | | | loan calculator ( to see how the total cost of the loan |
| payments. With interest rates at their lowest for years, | | | | reduces when the repayment period is shortened. A |
| you can find some excellent rates - sometimes far | | | | refinance loan can save you thousands in interest |
| much lower than what you're paying for your current | | | | charges over the life of your loan. |
| loan or mortgage. Refinancing your mortgage or loan | | | | 4. Refinancing to Switch From Variable to Fixed Rates. |
| when rates are down could save you hundreds of | | | | You can also refinance in order to switch from a |
| pounds every month and thousands over the life of | | | | variable rate loan to a fixed rate loan. The main reason |
| your loan. | | | | behind this type of refinance is to obtain the stability |
| 2. Refinancing to Consolidate Debts. | | | | and the security of a fixed loan. Fixed loans are very |
| You may choose to refinance in order to consolidate | | | | popular when interest rates are low, whereas variable |
| debts and replace high-interest loans with a low-rate | | | | rate loans tend to be more popular when rates are |
| loan. The loans being consolidated may include higher | | | | higher. When rates are low, you can refinance to lock |
| purchase loans, student loans and credit cards. You | | | | in low rates. When rates are high, you may prefer the |
| can clear all your existing credit cards, loans and other | | | | short term discounted variable rate loans to obtain |
| debts and replace them all with one low cost cheaper | | | | lower payments. A major benefit to refinance is the |
| monthly payment. On a £12,000 loan some | | | | ability to lock in a low interest rate for the duration of |
| homeowners can save in excess of £250 a | | | | your loan. |
| month which is a considerable saving. A debt | | | | 5. Refinancing to Switch from One Lender to Another. |
| consolidation loan is a smart solution for anyone who | | | | Some lenders offer better mortgage or loan deals |
| has many outgoing monthly payments. A Refinance | | | | than others. They may offer better customer support |
| loan allows you to repay existing loans from the | | | | services, more flexible loan repayment terms or just a |
| proceeds of a new loan - the loan is usually secured | | | | service that is more suitable for your needs. |
| on property or your home. | | | | Refinancing your loan can allow you to drop your |
| 3. Refinancing to Reduce the Term of the Loan. | | | | current lender and switch to a new one with a better |
| Reducing the term of your loan can help you save | | | | loan or mortgage package. |