The constant struggle between banks for clients has led to a general decrease in interest rates on loans. Is it really profitable for banks? Today, the average rate on loans in rubles has dropped below 10 percent for mortgages and 13 percent for consumer needs, and a year ago it was 14-17 percent.
The proposal to renew the old loan at a lower interest rate has become very popular. If you calculate the benefits on a specific example in rubles, the savings will become obvious. It is most beneficial for mortgage loans and large consumer loans. Refinancing of small consumer loans becomes unprofitable. Experts do not recommend re-issuing a loan if the difference in loan rates is less than 2%. However, before applying for a loan renewal, you need to clearly weigh the pros and cons.
Advantages of on-lending:
- reduction of the interest rate;
- decrease in the size of the monthly installment (by increasing the maturity);
- consolidation of debts to different banks into one;
- removal of encumbrances from the pledged property;
- revision of the loan currency;
- the opportunity to receive additional funds for any purpose.
Disadvantages of loan reissuance:
- compulsory expenses, which the borrower will meet as soon as he turns to the bank for more detailed information:
· From 14 thousand rubles. new registration of life insurance of the borrower and the property (issued annually);
· From 4 thousand rubles. - new real estate appraisal, because the term of validity of the conclusion is actual 6 months. (for mortgage lending);
· Payment of the fee for registration of property rights.
- individual requirements of specific banks:
· Moratorium on early loan repayment;
· Payment of a fine for early repayment;
· Payment of commission from the loan amount;
· The ability to refinance a loan up to a certain amount.
- limited ability to combine loans (up to 5).
The re-issuance procedure itself may require servicing two loans at the same time for a certain time (the second was taken to repay the first, but repayment takes time).
Why do credit institutions need it?
Search and attraction of responsible paying clients! Financial organizations really do not want to lose such clients, therefore, to refinance debt, you do not even need to contact another bank. Many large banks have their own programs for re-issuing loans to their own customers with more favorable terms.
The rates so low today are clearly not the limit. They continue to decline every year. For example, at the beginning of this year, the key rate from the Central Bank is 7, 75 percent, and by the end of the year it may drop to 7 percent.
This means that on-lending by the end of the year may turn out to be even more profitable. However, one should not forget that during this year, before refinancing, you will have to pay at the old rate.
In any case, refinancing loans is very attractive both for banks and for the population. Consumers are increasingly turning to a bank (their own or a partner bank) in order to find more favorable conditions, because there are more and more offers with favorable conditions on the market. If in 2017 7 percent of clients applied for refinancing, then by the end of this year experts predict an increase in the number of those who applied to 20 percent.
