Mortgage Tips

If you combine mortgages on your home, you can benefit from it in a number of ways. Especially if the interest rates are low and you have a good credit history, you can gain financially from the decision.

So how do you combine mortgages? It can be done by refinancing all your home loans or mortgages and consolidating them under a single mortgage with a fixed or a variable interest rate. This would entail closing your existing mortgages and getting a new mortgage at better terms.

Benefits of combining mortgages

• Save money on monthly payments: Consolidating mortgages and combining them under a new mortgage often allows you to drive down the overall interest payout every month. Especially when the market lending rates are lower than when you took the original loans, combining them will benefit you financially. There can also be cases where the interest rate itself may not be low, but you can reduce your monthly payments by getting an extended period of loan repayment.
• One single monthly payment: Combining mortgages allows you to consolidate your repayment commitments under one single monthly payment. This way you are able to manage your finances better and in a more organized fashion. This saves time and you don’t have to deal with multiple debts, which can often spiral out of control.
• Pay off other debts: You can even borrow some extra money as a part of the refinanced loan to settle other high interest rate debts like credit card debts etc. Another key benefit of taking a home loan is that its interest is tax deductible, so it saves you some money on tax obligations. Combining you mortgage offers you a great opportunity to consolidate your debts and restructure your finances.

Your being able to derive these benefits from combining mortgages is subject to a few things. To get a good deal on the refinanced loan, you will need to have a good credit score and a clean credit history. In addition, the prevailing market lending rates should also be low so that the lenders can offer you attractive interest rates.

You also need to consider the closing costs of your current mortgages. Many times, the combined closing costs of mortgages turn out to be so high that they outweigh the benefit of the lower monthly payments of the refinanced loan.

It is best to seek advice from a loan expert before opting to combine mortgages as he or she can run the calculations for you to ascertain if the whole process will yield any financial benefit whatsoever. An expert can also help you select a lender who can give you a good deal on your refinanced mortgage.

Combine mortgages only when you are 100% sure that it will have some financial benefit. You can also consider combining mortgages to simplify your life, but it will be bad financial planning if you lose significant money on your new loan. The new deal has to be financially sustainable for it to make sense for you.