During the crisis, banks began to raise rates on all types of lending and penalties for late payments, thus minimizing the risks that arose. When the economic situation in the country stabilized slightly, interest rates on bank loans began to decline. In response to this, enterprising borrowers, who took out a loan at an unfavorable rate, began to look for options for refinancing debt. Can you really benefit and reduce costs by refinancing an existing loan with another bank?
What do you need to refinance loans from other banks?
The main purpose of refinancing loans is the full repayment of one loan by obtaining a new loan, issued on more loyal terms. Refinancing gives the borrower the opportunity to lower the interest on the loan, change the currency of the loan and get a loan more than it was on the previous loan. You can refinance both large loans (for example, mortgages, car loans, etc.) and ordinary consumer loans. True, refinancing a large loan is not always profitable, since the cost of re-issuing it may exceed the amount of interest remaining on the original loan.
A borrower wishing to refinance a loan from another bank must meet the following requirements:
- have a good credit history;
- the term of a valid consumer loan must be at least 6 months, and for mortgage loans - at least 1 year;
- there should be no current overdue debt on the refinanced loan.
In general, the refinancing procedure is practically no different from the initial loan. The bank will also check the borrower's credit history and the level of his income (if it has decreased, then the loan may be refused refinancing).
What loans can be refinanced?
In general, any bank loan can be refinanced. A borrower wishing to refinance an existing loan must, in addition to the standard package of documents, provide the bank with a loan agreement and a certificate of the amount required for full early repayment of the existing loan. You also need the details of the account to which the funds will be transferred from another creditor.
When refinancing a mortgage loan, you cannot do without additional certificates, which means that you cannot avoid unnecessary expenses. To re-register a mortgage in another bank, you will have to re-encumbrance of residential real estate and record this process with the Federal Registration Service. Due to the constant fluctuations in market prices for real estate, the insurance contract will also need to be re-entered into. Re-registration of all documents and notary services require certain financial costs, which in total will amount to about 30-40 thousand rubles. That is why experts do not recommend refinancing a mortgage loan if it is issued for a period of more than 5 years.
If the borrower wants to refinance a car loan, then he should contact a bank that offers more favorable conditions for this type of lending. If the car is in good condition, it can be re-issued as a security deposit.
Borrowers who have issued a large consumer loan in cash can also use the refinancing service. With the help of on-lending, they will be able to reduce the amount of the loan payment or extend the loan period by registering an amount more than is required for early repayment of the loan (the difference is given to the borrower).
