The increase in interest on bank loan products is pushing borrowers to seek profitable offers. Thanks to this, mortgage on-lending is becoming more and more popular. But before agreeing to such proposals, it is necessary to find out whether they are really beneficial in reality?
Reasons to Refinance
Mortgage refinancing is the execution of another loan with better conditions, the purpose of which is to close an existing housing loan. Such a step is decided by those who consider the offers of other banks more profitable than the one they signed up to before.
If earlier mortgage loans were issued at 13% per annum, today most banks offer the same service already at 10-11%. Naturally, such a mortgage will be cheaper. Therefore, reasonable borrowers begin to search for financial institutions that can lend to them. Since banks are in no hurry to restructure existing loans, the search for ways to refinance becomes a logical and correct decision.
Given the terms for which housing loans are issued, re-lending mortgages is very beneficial. Lowering the rate even by a couple of percent will help in this case to save significantly. If the difference in interest is less, then it is better not to refinance. After all, refinancing will require a mortgage at another bank with all the ensuing consequences: insurance, payment of all necessary fees and commissions. And do not forget about how much effort and time will be spent.
Conditions for refinancing
Not all banks can offer their clients on-lending of mortgages. Such an offer relates to high-risk ones, therefore, for the issuance of such loans an additional reserve is needed, and not every creditor can form it.
Despite the fact that the financial position of the borrower was checked when applying for a housing loan, re-lending a mortgage to another bank will require a second check.
Refinancing Requirements
As for any loan, credit history is important when refinancing. In addition to the standard set of documents required to apply for a loan, the bank will require a valid mortgage agreement and a certificate of the absence of delinquencies and the conscientious fulfillment of loan obligations. You will also need the written consent of the current lender for early repayment of the mortgage.
Customer requirements
A valid mortgage loan must be issued at least 1 year ago and delays in payments should not be allowed during the use of a housing loan. If we consider the re-lending of mortgages at Sberbank, we can note very attractive conditions. But only conscientious payers can count on refinancing.
Different ways of refinancing
As in the case of the initial housing loan, in order to apply for a mortgage on-lending, banks will require a pledge, which serves as the acquired property. For this reason, the client will need to submit documents that confirm his financial situation and the conclusion of the appraisers regarding the cost of housing.
The bank that issued the mortgage loan will require formal written consent to close the loan ahead of schedule. The refinancing lender is required to transfer money to the required bank account, which, upon receipt of funds, closes the loan and removes the security deposit from the residential property.
For a short period during which one credit institution withdrew the mortgage from the property, while the other has not yet imposed it, the client will have to pay increased interest on the loan. Such a measure is a kind of insurance for a refinancing bank. After all, there is no other security for this loan yet. But as soon as the completion of the pledge, the reduced interest rate will begin to operate.
Possible Mortgage Loan Proposals
Those who decide to refinance mortgages, it is useful to familiarize themselves with the proposals of several banks. They may differ in the following parameters:
- interest rates;
- loan terms;
- loan amounts.
There is only one invariable condition that all creditors put up. It concerns the purpose of the loan, which is used only for the full repayment of a mortgage in another bank. Moreover, sometimes the funds are directed only to repay the amount of the principal debt, and the borrower will need to pay interest and other obligatory payments separately.
Another option for refinancing involves not only the payment of the main debt, but also the repayment of interest and other loan payments. Less often, a loan is issued in excess of the amount of payments under the current mortgage agreement. In this case, the client has the right to use the remaining funds, as he pleases.
Bid difference
A mortgage loan implies large amounts of debt, so before choosing a bank, you must carefully study all the offers and take the time to calculate the benefits.
Loans offered by banks can have fixed and floating rates. Already by name it is clear that the former remain unchanged for the entire lending period. This is very convenient and allows you to plan expenses in advance.
The floating rate has two components: constant and variable. One will remain the same, the other directly depends on external factors that will be indicated in the contract. For ruble mortgages, it is customary to calculate a floating rate using the Mosprime indicator, due to which fluctuations can occur daily.
Along with bank rates, there is a refinancing rate set by the Central Bank. This is the main tool that allows you to control credit interest, used by the Central Bank of the Russian Federation when issuing loans to banks. This rate is subject to change, but not more than 1 time per year.
Currency Mortgage
Mortgage lending is often not so beneficial. A loan in foreign currency may seem more attractive at the time of registration, but the currency market is unstable, and the situation can radically change at any time. At the same time, payments will increase.
In some cases, banks agree to change the currency of the loan, but not all go for it. Yes, and everything will depend on the specific borrower.
Types of refinancing
Changing one loan to another, you can change its basic conditions. For example, reduce or increase the term of a mortgage, change the loan currency, lower the interest rate or reduce the amount of monthly payments.
The latter option is the least profitable, since with a decrease in mandatory payments, the mortgage term increases, and, consequently, the overpayment on the loan.
Bank Offers
The most profitable is the re-lending of mortgages at Sberbank. Customer reviews of this organization are mostly positive. Refinancing covers the entire part of the debt in another bank, and the loan term can reach 30 years.
If the amount of the debt does not exceed 1.5 million rubles, it makes sense to contact RosEuroBank. The term of the contract is up to 20 years, but requires a commission of 0.8% of the amount received.
Mortgage on- lending at the Bank of Moscow is possible even with a small amount of debt balance, while at a very low interest of 11.95-12.95% and a long term of up to 30 years.
In cases where the mortgage loan is very large, Absolut Bank will come to the rescue. He works with loans up to 15 million rubles. Loan term up to 25 years. But the customer will need insurance and pay a commission.
Do not rely too much on the honesty and openness of credit organizations. Not all banks report all upcoming payments under a loan agreement, which in reality can hold many pitfalls. Therefore, deciding on a refinancing, it is necessary to study in detail all the offers, insurance requirements, payment of commissions, etc., so that the desired benefit is not imaginary.