Refinancing is a good way to ensure that you retain your property when in cash crunch. However, not all refinancing deals are good. Especially for new investors, it can put you in a vicious circle that will be hard to get out of. In this article, I will take you through the dangers of property refinancing. Read on!
Property refinancing has many dark sides. The first one is the source of the e money for the refinancing deal. There is nothing wrong with using interest free mortgages to refinance your properties. Especially when these are some sense in the transaction, it is worth going for it.
However, some other financing options are there to make a kill. Some financiers might take advantage of your situation and make you pay for this highly. This will not be very good for you. Especially when you use refinancing brokers, you will tend to pay more than twice the cost making it the most expensive experience you can go through.
Refinancing your property to the point when there is no cash inflow in the property is dangerous. If you overspend on renovations, it may not be very good since the expenditure will reduce your profit margins. Over financing have caused the fall of many experienced investors.
Many new investors have too suffered in this lone. However, these can be avoided. So instead of refinancing, it is better to sell your assets that perform below your expectations. Use the surplus to meet your urgent refinancing needs and avoid going for external funding. Try to have some money in a reserve account to enable you face such unforeseen circumstances. Through this, the cost will be kept down.
When looking for refinancing, you will have to sacrifice many things in your life. You will need to stop the extra spending on non essential items. You will not be able to get out for your routine leisure and other entertaining places.
This becomes a lot tricky. When it reaches a point when you have to take a part time job to refinance your property, you will feel hard pressed. Your free time will be gone and you will not be at a position to enjoy any more.
Mental anguish is one major setback when refinancing. You will lose sleep as a result of this. And if the worst happens that you don't find a good refinancing option, you will lose your property which will be a major setback for you and your loved ones. The experience you will go through will not be a good one.
In summary- The dangers of property refinancing are many and of varied nature. The process is expensive. It will snatch you of your freedom if you have to work extra hours to meet the additional financial obligation.
Even when you strike a deal with your mortgage lender, it will remain a temporary relief which will haunt you at later times. So instead of refinancing, you can opt for other friendly methods that can enable you achieve your dream.
By: Tridipta K Ghosh
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