Refinancing a mortgage loan is an opportunity to take a loan from another bank to pay off a previous mortgage. The procedure requires the provision of a full package of documents, an assessment of the mortgaged real estate.
Refinancing a mortgage loan involves obtaining a new loan to repay the old one on more favorable terms. A procedure is being carried out if it is necessary to reduce the interest rate, increase the payment terms, release the property from encumbrances. Not all banks are ready to offer such a service on really favorable terms.
Parameters for determining the benefits of mortgage refinancing
The increase in the period of payments on debt allows you to reduce the payment. Often this approach is used if there is a decrease in income due to the loss or change of work. Refinancing allows you to keep the apartment, despite the increase in the terms of repayment of the housing loan.
The market situation is constantly changing. People who borrowed funds at increased interest rates during the crisis can apply to the bank to adjust the rate. Financial institutions are more likely to agree to such a move if the person can provide an objective reason for the need to reduce interest. This could be:
birth of a child;
- divorce;
- reduction in wages;
- downsizing at work;
- change in health status.
It is beneficial to use special programs if you need to change the currency in which the loan is taken. The appropriateness of the loan depends on the established rate. As it rises, the benefits diminish. Sometimes they get ruinous.
Conditions and methods of registration
There are some requirements for the borrower:
- a previously obtained loan must have a period of at least 20 months;
- the entity must have a good credit history, avoid delinquencies;
- the entire package of documents is reassembled.
When using on-lending, you must provide a collateral. They can act as a property that previously acted as security or new. Assessment of the property is carried out, on which the adjustment of the interest rate and other features depend.
The borrower must obtain the written consent of the bank, where the mortgage was previously issued, for the early repayment of the debt. The second bank will transfer funds to the desired account. Only then will the first financial institution remove the encumbrance from the property. In the period when such an event has already taken place, but the new bank has not yet completed the documents for the object, higher interest rates may be assigned.
Certain requirements are also imposed on the pledge:
- he should not have any other encumbrance, except from the loan for the first mortgage;
- ownership must be formalized in accordance with all the rules;
- until the process of transferring real estate from one bank to another is completed, the apartment cannot be rented out.
Thus, mortgage refinancing is a financial service that reduces the financial burden. Before deciding to use such a service, you need to independently make calculations, taking into account the need to issue new insurance and fees for reissuing documents.
