Why It’s Okay To Consider Home Loan Refinancing

One of the main reasons why you wanted to work overseas is to be able to provide a better life, standard of living, and future for your family. This includes buying a house that you can call your own home.

Still, the reality is buying a house includes at least a million and you cannot easily shell out the amount. What you do is to apply for a Home Loan through PAG-IBIG or your preferred bank to help finance the purchase of your home.

Unfortunately, pandemic hit the entire world and your job overseas is affected. You’re also worried that you might lose the house you built for your family. Still, you have no choice but to pay since this is borrowed money after all.

How can you save the house you built? Consider home loan refinancing.

What is home loan refinancing?

Refinancing of home loan is the process of paying an existing mortgage using proceeds of a new loan from a different lender. Compared to the old home loan, the new one has lower interest rate and better terms since the purpose of this facility is to help borrowers become more able to pay off the home loan.

Why should you opt for home loan refinancing?

You can get lower interest rate.

Home loan refinancing is all about timing. Because of the pandemic, the Bangko Sentral ng Pilipinas reduced the interest rate to 2.25 percent, the lowest policy interest rate in the history, by far (1). This is to help reduce the impact brought about by the Covid-19 pandemic by making repayment easier.

What is the effect on your home loan interest rate?

Low policy rate means mortgage rates are low as well, which all lenders must strictly adhere to. Your monthly repayment will be lower, too, because the interest rate is decreased by at least one to two percent. This allows you to have additional savings, which you can use for other equally important obligations.

You want to change your loan repayment term.

Longer loan term is not always recommended because you’ll end up paying more because of the interest. On the other hand, short loan term is not ideal, too, because monthly repayment is higher and heavier on the pocket.

When you refinance your home loan, you can negotiate about how long you plan to pay it off. The good thing about this is that whether you choose short or long loan term, you are still able to save because of the lowered interest rates.

You want lower monthly payments.

Think about this: your current home loan lets you pay P10,000 every month. Because you opted for home loan refinancing, you can enjoy a lower interest rate, thereby reducing your monthly amortization to P8,000.

That P2,000 can be considered as savings or an additional fund to pay off other expenses like monthly utility bills.

You want to consolidate your existing loans.

Let’s say you also have other loans like personal loan or auto loan. Did you know that you can consolidate these together with your home loan into one loan?

Typically, personal loan and credit cards have higher interest rates. When you consolidate it with your home loan, you can enjoy lower rates, which means you will be able to reduce the amount of money that goes into loan payment.

The best part is you only have to worry about one loan. There’s no more excuse for missed or delayed payments just because “you forgot.”

Scout for lenders that offer home loan refinancing. Explore the features since every lender have different offers. Find an offer that you can greatly benefit from. You will be able to save more money, which you can re-allocate for savings, payment of utility bills, or fund for your new online business. More importantly, you won’t lose your home that you built for your family.


(1) https://www.cnn.ph/business/2020/10/1/BSP-policy-rate-decision-October-2020.html

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