Refinancing a mortgage is nothing more than paying off financial debt to one financial institution by borrowing money from another. Today, many banks offer this type of service in order to expand their client base.
Loan refinancing is especially in demand in the field of mortgage lending. Let's consider the situation with an illustrative example: the borrower took out a mortgage loan at 20% per annum for a period of 25 years in bank "A". However, he soon discovered that Bank B was giving the same amount of mortgage at 15% per annum.
He decides to take a loan for the required amount from bank "B", pay off the debt to bank "A", and then, in the usual way, pay the mortgage to bank "B", only with a much lower interest rate. At the same time, 5% per annum remains in the borrower's pocket. Taking into account that the mortgage is designed for 25 years, and the bank has to pay interest every month, the bank's client will eventually save a significant amount.
What to look for when refinancing a mortgage
When switching to a more suitable loan, it is necessary to collect all the required documentation again, in this regard, you need to be prepared for the fact that you will have to incur financial costs again. You will need to take a certificate from the BTI, bring it from the place of work. You will have to contact the appraiser again, pay for his work.
The borrower should make calculations at the initial stage. This will determine whether or not to start refinancing at all. It is necessary to determine the difference between the old loan and the new one. The cost of obtaining a new mortgage is deducted from the amount received, so a real picture of cost savings is obtained.
When to refinance your mortgage
The service is offered by Sberbank, borrowers often turn to banks VTB, Gazprombank and Rosselkhozbank. Refinancing at Tinkoff is possible. But it is worth doing this in the following cases:
- the mortgage was issued for a large amount;
- it will take a long time to fulfill obligations to the bank;
- a large interest rate (when compared with those offered by banks at the moment).
With a small loan amount or a short term until full repayment, it makes no sense to engage in mortgage refinancing, because with a small difference in interest rates, you will only be able to save a couple of thousand rubles.
If the borrowers took out a mortgage, made contributions, he had 500 thousand rubles left to repay, then you need to compare the interest rates of the old loan and the new one. With a difference of 1% over a five-year period, the borrower will save 15 thousand rubles. But he will have to draw up documents, so expenses should be deducted from this amount.
It will be good if it goes to zero in such a situation, but the costs of registration can be significant, so in this case it is better to leave the old mortgage. If the client of the bank has just started paying, he will fully repay the mortgage in 15 years, it is worth comparing the amount saved and the cost of paperwork. If the first is overweight, you can start refinancing.
