A home loan or retirement pension refinancing: ways to use the value of your home

A home loan and cash refinance are two ways to access the equity in your home. The best option depends on interest rates.

A home loan and cash refinance are two ways to access the equity in your home. Although the loans are similar, they are not the same. If you already have a mortgage, a home loan is a second payment, while cash refinancing replaces your current loan with a new term, a new interest rate, and a new monthly payment.

Use for home loans and refinancing cash withdrawals

Buying a home is often presented as a “mandatory savings account”. A monthly loan payment along with any property appraisal creates value in the home. However, you cannot access this value called capital without selling it. Instead, you need to borrow the capital that you can earn with these credit products.

Of course, you need to have some home equity first.

“If you’ve recently bought your home, you might not have much to do. If you’ve owned your home for five to ten years and made your payments on time, you’ll have more equity in your home, ”said Johnna Camarillo, vice president of the Navy Federal Credit Union.

To determine your home equity, find out how much your home is worth and how much you still owe on the mortgage. If the difference between the two is a positive number, it is the equity you have in the home. However, if you owe more than the value of your home, you are not a candidate for retirement refinancing or a home loan.

How loans are similar

Both usually come with fixed interest rates, although adjustable interest rates are possible with repayment.

Typically, you need a post-transaction credit value ratio of 90% or less to qualify for either.

You will receive a lump-sum payment for both products

How are loans different

Interest rates for cash refinancing are generally lower than for home loans. According to Camarillo, lenders often pay all or most of the cost of taking out a home loan. This is not the case with most cash withdrawals. A refi is a great loan, while a home loan is a loan on top of your first mortgage.

Frequently Asked Questions About Getting A Home Loan vs. Refinancing

Is It Better To Refinance Or Home Loan?

First, consider mortgage rates.

“If a customer can lower their interest rate on their entire first mortgage and then withdraw additional cash,” Camarillo is considering a cash withdrawal refi.

If the current interest rates are higher than the interest rates on your existing mortgage, a home loan will likely make more sense.


In general, it is a little easier to qualify for retirement. They replace your primary mortgage. Lenders like it because it gives them the “number one position” as a creditor.

In general, it is a little easier to qualify for retirement. 

Home loans are “second mortgages” which means that the loan is second in terms of repayment priority.

And it is worth buying both loans to get the best interest rate and the best terms. You don’t need to contact your current mortgage lender for either of the two products.

How much can you lend?

“When mortgage options are guaranteed, the amount a person can borrow is usually determined by things like home equity, credit rating, and debt-to-income ratio. says PK Parekh, vice president of Discover Home Equity Loans.


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