If you feel too constrained by your current home equity loan payment plan, it’s time to reconsider your opportunities.
Let’s see the four ways your current home loan is holding you back:
1) You have restrictions on payments.
You simply have to pay the amount due depending on your current debt and the interest rate you are charged.
2) You can have large cash flow swings when during the year you have to incur large recurring and expected annual expenses.
This gives some cash flow problems for the period and lack of money.
3) You have large fluctuations in your cash flow due to large annual expenses (such as summer vacations).
Similar to the previous one, but larger. When this happens, and you already know when it will happen, you simply require extraordinary management effort for your finances.
4) Oh, of course it is possible that you are paying very high interest rates and simply want better loan terms. But of course your current terms tie you to your current payment.
Two steps to a better way
1) Find a type of mortgage that will give you more and allow you to work around these problems.
2) Refinance your existing home equity loan with the new one.
Well, if you suffer from “loan repayment flexibility syndrome” you are in luck. In fact, there are currently equity loans designed to help you out. They are Flexible Home Equity Loans.
These are equity loans that allow you to make overpayments to reduce debt (i.e. interest), make installment payments when you’re short on money (if you’ve overpaid before) and skip a payment in the year if your previous overpayments gave you enough margin.
How will we replace our current loan with a new one? Well, refinance it, that is, ask for a new loan with new conditions that will pay off the previous one. So it is a way to replace the old loan with a new one, based on new contractual terms. It is important to take advantage of the new conditions for three different points:
1) contractual flexibility (what you’re looking for);
2) the interest rate paid (for fixed-rate mortgages) or the spread paid (for underlying tracked equity mortgages);
3) Lower costs.
So, what are the five 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) Market research
As you can see, market research is essential when considering loans, since flexible loans, equity loans, and other loans change in price. Check out the presence of lenders in the Internet and keep track of their offers.
3) View the exploit market
Since home equity loans and remortgage loans are so common, there are a wide variety of loans to choose — most of which have their own differences. Understanding market offerings and what makes them different.
4) Exploiting market competition
Mortgage companies compete with each other, and the other offers some of the best rates in the market. Take advantage of this market competition for low interest rates and near-zero loan expenses.
5) Close the deal
First, ask your company to refinance. Use what you gathered in the previous steps (ie what the lender’s competitors are willing to do with you to win a new customer) to facilitate your negotiations.
If your company is deaf, ask another company to offer better terms and use the new money to close off the previous debt with the old lender. Pay attention to the costs of closing the previous contract (there are usually penalties related to expected extinction).
So, we have a new contract. then?
1) Exploiting overpayments to reduce the interest paid
Since flexible rate equity loans offer you the ability to overpay your mortgage, do so as soon as and as often as you can.
In effect, overpayments will result in less debt, so you’ll pay less interest independently of what happens to interest rates.
2) Exploiting underpayments
If you’ve overpaid “enough” (depending on the contract you signed), you can also “underpay” against the mortgage, provided you’ve made the required minimum amount and number of payments.
3) Exploit vacation package
Since these loans also offer “holiday packages” for lower payments, go for it! So if you overpay enough, you can stop the payments for a month to take a vacation. This will reduce the biggest cash flow issue we’ve talked about.
Flexible rate equity loans are definitely a way to make use of your resources to improve your equity loan. If you feel your equity loans are too much of a constraint, take a look at this option.