Refinancing to Save? Watch Out for This Costly Mistake!
Refinancing your home loan is often marketed as a smart financial move—lower rates, reduced repayments, and potential savings. But there’s a hidden trap many borrowers fall into: a reset on their loan term that ends up costing them more in the long run.
The Common Refinancing Mistake
When you refinance, lenders often default your new loan to a fresh 30-year term. While this lowers your monthly repayment, it can mean paying tens (or even hundreds) of thousands more in interest over the life of your loan. Let’s break it down:
🔹 You’ve had your mortgage for 5 years, and you refinance to a lower rate.
🔹 Instead of refinancing for the remaining 25 years, the new lender sets you up with another 30-year loan.
🔹 Your repayments drop slightly, but now you’re committing to an extra 5 years of interest payments.
What seemed like a smart saving move could actually mean you pay more overall!
How to Avoid Paying More Interest
The good news? You don’t have to get stuck in this trap! If you’ve refinanced and unknowingly extended your loan term, you can still adjust your repayments to match your original timeframe.
📌 Use the Loan Repayment Calculator at 360 Mortgage Solutions to check what your repayments should be to stay on track with your original loan term.
By adjusting your repayments back to what they should be, you’ll: ✅ Pay less interest over time ✅ Get out of debt faster ✅ Keep the real savings from your refinance
Before refinancing, always check the loan term and adjust your repayments accordingly. A lower rate is great, but only if it actually saves you money in the long run!