Mortgage refinancing: make your mortgage cheaper!
What is a mortgage refinancing?
This is a situation when a potential borrower already has a loan secured by real estate, and he wants to transfer his liabilities 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 (reduction in interest rates). Secondly, an increase in the loan term, which, of course, will lead to a decrease in monthly loan payments. Thirdly, it becomes possible to obtain additional funds (consumer lending). Fourth, refinancing is simply an opportunity to change a bank if it does not satisfy with its service, professionalism, etc.
How does refinancing work?
Refinancing, unlike conventional consumer loans secured by real estate, has a number of nuances. Analysis of the borrower's creditworthiness is based on how the existing loan was repaid. If the borrower had delays of more than 7 days during the entire period of use of the loan, then the chances of receiving a positive decision on refinancing are void.
The deal itself is also non-standard. It is carried out in several stages.
At the first stage, a loan agreement and a surety agreement, an insurance policy are concluded. The bank transfers funds to the creditor bank in the amount of your debt at the current date (it is even possible to include the amount of interest on the current date in the refinancing amount). After the creditor bank has received the money, the mortgage property is exempt from the prohibition of alienation. The borrower receives a letter to the notary from the creditor bank stating that “there are no complaints from the bank” and removes the ban on his property with the help of a notary.
After this comes the second stage of refinancing. The borrower enters into a mortgage agreement with the new bank and may receive the remaining amount in his hands, if necessary.
Sometimes it turns out to conduct a deal in one day, but this is rather an exception to the general rules.
When is it profitable to refinance your mortgage?
A simple example. If you have a bank debt 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 advantages 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 of creditor.kiev.ua .
This is a situation when a potential borrower already has a loan secured by real estate, and he wants to transfer his liabilities 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 (reduction in interest rates). Secondly, an increase in the loan term, which, of course, will lead to a decrease in monthly loan payments. Thirdly, it becomes possible to obtain additional funds (consumer lending). Fourth, refinancing is simply an opportunity to change a bank if it does not satisfy with its service, professionalism, etc.
How does refinancing work?
Refinancing, unlike conventional consumer loans secured by real estate, has a number of nuances. Analysis of the borrower's creditworthiness is based on how the existing loan was repaid. If the borrower had delays of more than 7 days during the entire period of use of the loan, then the chances of receiving a positive decision on refinancing are void.
The deal itself is also non-standard. It is carried out in several stages.
At the first stage, a loan agreement and a surety agreement, an insurance policy are concluded. The bank transfers funds to the creditor bank in the amount of your debt at the current date (it is even possible to include the amount of interest on the current date in the refinancing amount). After the creditor bank has received the money, the mortgage property is exempt from the prohibition of alienation. The borrower receives a letter to the notary from the creditor bank stating that “there are no complaints from the bank” and removes the ban on his property with the help of a notary.
After this comes the second stage of refinancing. The borrower enters into a mortgage agreement with the new bank and may receive the remaining amount in his hands, if necessary.
Sometimes it turns out to conduct a deal in one day, but this is rather an exception to the general rules.
When is it profitable to refinance your mortgage?
A simple example. If you have a bank debt 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 advantages 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 of creditor.kiev.ua .