Mortgage refinancing: make your mortgage loan cheaper!
What is mortgage refinancing?
This is a situation where a potential borrower already has a loan secured by real estate, and he wants to transfer his obligations from one bank to another on the security of all the same property.
What are the benefits of refinancing for a borrower?
Firstly, this is a decrease in the cost of credit resources (a decrease in the interest rate). Secondly, an increase in the loan period, which, of course, will lead to a decrease in monthly payments on the loan. Thirdly, it is possible to obtain additional funds (consumer lending). Fourth, refinancing is just an opportunity to change the bank if it does not satisfy with its service, professionalism, etc.
How is refinancing going?
Refinancing, unlike conventional consumer loans secured by real estate, has a number of nuances. The analysis of the creditworthiness of the borrower is based on how the existing loan was extinguished. If the borrower had a delay of more than 7 days during the entire period of using the loan, then the chances of getting a positive refinancing decision are insignificant.
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The transaction itself is also non-standard. It is carried out in several stages.
At the first stage, a loan agreement and a guarantee agreement, an insurance policy are concluded. The bank transfers funds to the lending bank in the amount of your debt on the current date (it is even possible to include in the refinancing amount and the amount of interest on the current date). After the creditor bank received the money, the collateral property is exempt from the prohibition of alienation. The borrower receives a letter to the notary from the lending bank that “there are no complaints from the bank” and removes the ban from his property with the help of a notary.
After this comes the second stage of refinancing. The borrower enters into a mortgage agreement with a new bank and, perhaps, receives the remaining amount, if such was necessary.
Sometimes it turns out to make a deal in one day, but this is rather an exception to the general rules.
When is it beneficial to refinance your mortgage?
A simple example. If you have a debt in the bank of 100 thousand dollars for 20 years at 13% per annum, and you refinance it for the same 20 years, but at 12.5%, the economic benefit will be 9 thousand dollars, which already triple covers all your costs associated with the transition from one bank to another, not to mention the other benefits of this operation.
Therefore, if you have a long-term loan (more than 5 years), then it is worth refinancing on the best conditions.
Published with permission from creditor.kiev.ua .
This is a situation where a potential borrower already has a loan secured by real estate, and he wants to transfer his obligations from one bank to another on the security of all the same property.
What are the benefits of refinancing for a borrower?
Firstly, this is a decrease in the cost of credit resources (a decrease in the interest rate). Secondly, an increase in the loan period, which, of course, will lead to a decrease in monthly payments on the loan. Thirdly, it is possible to obtain additional funds (consumer lending). Fourth, refinancing is just an opportunity to change the bank if it does not satisfy with its service, professionalism, etc.
How is refinancing going?
Refinancing, unlike conventional consumer loans secured by real estate, has a number of nuances. The analysis of the creditworthiness of the borrower is based on how the existing loan was extinguished. If the borrower had a delay of more than 7 days during the entire period of using the loan, then the chances of getting a positive refinancing decision are insignificant.
')
The transaction itself is also non-standard. It is carried out in several stages.
At the first stage, a loan agreement and a guarantee agreement, an insurance policy are concluded. The bank transfers funds to the lending bank in the amount of your debt on the current date (it is even possible to include in the refinancing amount and the amount of interest on the current date). After the creditor bank received the money, the collateral property is exempt from the prohibition of alienation. The borrower receives a letter to the notary from the lending bank that “there are no complaints from the bank” and removes the ban from his property with the help of a notary.
After this comes the second stage of refinancing. The borrower enters into a mortgage agreement with a new bank and, perhaps, receives the remaining amount, if such was necessary.
Sometimes it turns out to make a deal in one day, but this is rather an exception to the general rules.
When is it beneficial to refinance your mortgage?
A simple example. If you have a debt in the bank of 100 thousand dollars for 20 years at 13% per annum, and you refinance it for the same 20 years, but at 12.5%, the economic benefit will be 9 thousand dollars, which already triple covers all your costs associated with the transition from one bank to another, not to mention the other benefits of this operation.
Therefore, if you have a long-term loan (more than 5 years), then it is worth refinancing on the best conditions.
Published with permission from creditor.kiev.ua .
Source: https://habr.com/ru/post/10763/
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