SDB Club Benchmark Real Estate

If you are a homeowner in Phuket who was lucky enough to buy when mortgage rates were low in Phuket, you may have no interest in refinancing your present loan. But perhaps you bought your Phuket home when rates were higher or perhaps you have an adjustable rate loan and would like to obtain different terms.

Should you refinance your Phuket property?
If you do refinance your Phuket home, the process will remind you of what you went through in obtaining the original mortgage for your Phuket home. That is because, in reality, refinancing a mortgage is simply taking out a new mortgage with the same bank or a different bank in Phuket. You will encounter many of the same procedures and the same types of costs-the second time around.

Would Refinancing Be Worth It?
Refinancing your Phuket home can be worth, but it does not make good financial sense for everyone. A general rule is that refinancing becomes worth if the current interest rate on your mortgage in Phuket is at least two percentage points higher than the prevailing market rate for properties in Phuket. This figure is generally accepted as the safe margin when balancing the costs of refinancing a Phuket mortgage against the savings.

There are other considerations, too, such as how long you plan to stay in the Phuket house. Most sources say that it takes at least three years to realize fully the savings from a lower interest rate, given the costs of the refinancing.

Refinancing can be a good idea for Phuket homeowners who:

- Want to get out of a high interest rate loan with a bank in Phuket to take advantage of lower interest rates. This is a good idea only if you intend to stay in your Phuket house long enough to make the additional fees worthwhile.

- Have an adjustable rate mortgage with a bank in Phuket and if you want a fixed-rate loan to know exactly what the mortgage payment will be for the life of the loan.

- If you want to convert to an adjustable rate mortgage with a lower interest rate or more protective features (such as a better rate and payment caps) than the adjustable rate mortgage the bank in Phuket currently have.

- Want to build up equity more quickly by converting to a loan with a shorter term.

- Want to draw on the equity built up in their house to get cash for a major purchase or for their children’s education.

If you decide that a refinancing is not worth the costs, ask your lender in Phuket whether you may be able to obtain all or some of the new terms you want by agreeing to a modification of your existing loan instead of a refinancing for your Phuket property.

Should You Refinance Your ARM?
In deciding whether to refinance an ARM you should consider these questions:

- Is the next interest rate adjustment on your existing loan likely to increase your monthly payments substantially? Will the new interest rate be two or three percentage points higher than the prevailing rates being offered for either fixed-rate loans or other ARMs?

- If the current mortgage with the financial insititution in Phuket sets a cap on your monthly payments, are those payments large enough to pay off your loan by the end of the original term? Will refinancing a new ARM or a fixed-rate enable you to pay your loan in full by the end of the term?