Despite the fact that credit refinancing has long been on the list of banking services, it appeared relatively recently in Russian reality. Literally since the development of mortgage lending. Along with the growing demand for real estate, the financial services sector has also developed. Mortgages in the list of services of each bank occupies a leading position.
Mortgage refinancing: conditions, best offers
The financial market is developing and offers new tools for saving and increasing funds. When buying a home, a mortgage helps, and deposits are used to increase savings.
The practical use of such a service as mortgage refinancing was facilitated by the market trend of recent years, when the number of overdue loans began to gain momentum. Thus, today the service is gaining popularity, more and more banks are ready to consider refinancing requests.
The essence of the procedure
By issuing a loan, the bank expects to make a profit that covers all maintenance costs plus its own income. Using a mortgage loan, the borrower believes that in this way he can move into housing now, and pay off over the next few years. But in matters of finance there are always risks. In this case, the borrower has the right to take advantage of refinancing.
The procedure is that the borrower applies to his or another bank for a new loan, the funds from which will be used to repay the old loan. According to the law, a bank does not have the right to refuse to grant a loan if the applicant meets all the requirements.
Mortgage refinancing is appropriate in the following cases:
- another bank offers lower interest rates;
- there is an opportunity to get a loan for a longer period and with low installments;
- monthly repayment of the old loan becomes excessive;
- There is an offer in another currency, which is beneficial for the borrower.
But it is important to consider another point. Mortgage loan refinancing can be carried out in the same bank where the existing loan is repaid or in a new other bank. The purpose of the procedure is to alleviate the credit burden of the borrower.
When it comes to another institution, “your” bank may refuse to transfer documents and early repayment, as in this case it loses its profit and client. Such a procedure is not prohibited by law.
Legal framework
The procedure is based on a number of bills and legal norms. The mortgage refinancing law takes into account:
- Federal Law No. 122 of 1997;
- Regulation of the Central Bank of the Russian Federation No. 54 of 1998;
- Regulation of the Central Bank of the Russian Federation No. 254 of 2004;
- Federal Law on Mortgages No. 102 of 1998;
- Civil Code, Articles 355, 390 and 382;
- Order of the Ministry of Justice of the Russian Federation No. 289/235/290 of 2000;
- Federal Law No. 152-FZ of 2003
The above documents describe the procedure for registration, rights and obligations of the borrower and the lender.
An important point: does the current contract allow refinancing? Some banks initially prescribe its impossibility or penalties for such a procedure. If it is not there or it is prohibited, then the client has the right to insist on inclusion in the contract.
Stages of the procedure
Mortgage refinancing is a lengthy process requiring a number of legal issues. The first stage is the study of offers on the market and calculations. It is important to consider that the procedure requires some costs, which will be discussed later. Expediency is determined on the basis of calculations made taking into account all associated costs.
It should be borne in mind that due to technical issues and high competition in the banking environment, not all financial institutions have a positive attitude to such an initiative of the borrower.
It is not enough to rely on publicly available information on the site or in the bank’s advertising materials. This can be a simple marketing move, while there is no mortgage refinancing program, and the offer extends to other types of loans.
Collection of documents
The list of documents does not differ from those that were submitted upon initial receipt. The sample list contains the following documents:
- application for refinancing, which is filled in place;
- income statement: 2-personal income tax certificate, bank statement or other payment documents;
- applicant’s general passport;
- for family - marriage certificate;
- documents for mortgage real estate: title document, agreement of the transaction and certificates from state authorities on registration of rights;
- copy of the bank mortgage agreement.
If you plan to refinance a mortgage loan at Sberbank, then maternity capital may be involved. Depending on such circumstances, the bank may request additional documents:
- certificate of maternity capital;
- birth certificate of children;
- bank statement on account balances.
If the bank requires the participation of guarantors, these persons must also provide a list of documents, including confirmation of solvency.
Difficulties
When a borrower applies for refinancing a mortgage loan to Sberbank or another financial institution, the current lender may refuse to issue certain documents. In this case, a professional lawyer in the banking sector can help or the new lender himself can request documents for issuance.
It is also important to consider that when confirming income, you will have to provide two types of documents: according to the 2-NDFL form and the bank form. Income indicators, of course, should be higher than the minimum living wage ratio and sufficient to continue to cover monthly mortgage repayments.
Another difficulty - when refinancing a mortgage loan, banks may require collateral. Given the amount of the loan, only real estate can act as collateral. And mortgage real estate is still listed on the balance sheet of the first lender.
In practice, in such cases, people resort to a little manipulation: negotiate with a friend or relatives who have equivalent property, mortgage this property, and after renewing the mortgage, they return everything to their places.
Review process
Acceptance for consideration does not mean anything. They may refuse even solvent customers. But collateral property can serve as a big argument. It is worth remembering that the more liquid the collateral is, the more chances there are to achieve the favor of the bank.
Also a lot of words are said about the importance of credit history. But experts say that such a moment is more relevant for small loans, where there is no collateral. A good credit history has not bothered anyone. Usually, the review process takes 5-7 business days. If a positive decision is made, then the process of registration begins.
Costs
Refinancing a mortgage loan in a bank entails some expenses that are borne entirely by the applicant. In some financial institutions, even the application review process takes place on a paid basis. In case of refusal, funds will not be returned.
If the procedure is approved, the applicant must be prepared for the following costs:
- Property valuation. The law states that the procedure can be carried out by any appraiser with the appropriate license. But banks have their own regular partners on staff. If the bank insists on a specific appraiser, the applicant is forced to agree to this.
- The costs of processing the application and servicing a specific client are the responsibility of the bank. So, you have to pay a commission for issuing a mortgage.
- To transfer collateral from the balance of the old lender, a fee is also charged.
- Registration of a new mortgage or the same object is also paid.
- Getting some types of help.
- Credit, real estate or personal income insurance - according to the rules of the bank.
- Payment of state duty if there will be notarial documents.
Depending on the conditions of the current lender, funds for early repayment of the loan and penalties may be withdrawn.
Benefits
Choosing another bank, the client is always looking for more favorable conditions. Experts advise that when refinancing a mortgage loan, the best offers bring tangible benefits if there is a difference in several ways.
On what points should the benefits be evaluated?
- Interest rate. How much lower? As a rule, if the difference does not exceed 3%, then taking into account the costs of registration and inflation, the client may not particularly win in the end.
- Change of term. A deep financial analysis, which not all ordinary citizens can do, shows that the “longer” the loan, the more expensive it is. A long term is worth choosing if there is no way to currently pay more.
- Reduced monthly installments. The same principle applies here: winning now, in the end, you can give more. But if the new proposal is really profitable, then it is worth considering individually.
- Consolidation of loans. Many Russians take several loans. Practice shows that 2-3 payments per month is a heavy burden. By combining all the obligations into one, you can live much calmer.
Where to go?
The competition in the banking environment is high. But this situation is only at hand for consumers: it goes where loans are cheaper. If you consider mortgage refinancing, the best offers belong to industry leaders:
- Sberbank - 10-12%
- VTB-24 - 9.7%
- Gazprombank - 9.2%
- Rossbank - 8.7%
- Bank of Russia - 11.5%
In 2018, due to a new wave of demand for real estate and the growth of the economy in the country, an increase in new offers is expected.
Refinancing Deduction
Tax deduction - a tax refund on personal income that was previously paid by the employer in the form of personal income tax. Its rate is 13%. The law provides for cases when a citizen can receive these funds back. The conditions for refinancing a mortgage loan allow the use of social guarantees such as maternity capital and tax deduction, if they were not used during the initial registration of a mortgage.
If you plan to receive a tax deduction, you should notify the loan manager in advance, since this moment must be displayed in the bank agreement.
The maximum deduction is 260,000 rubles. At the same time, there are requirements for the value of the object: the price should not exceed 2 million rubles. The deduction amount is allocated for the year. If the entire amount has not been used within 1 calendar year, then at the beginning of next year, the recipient must again fill out a tax application and collect the remainder. Returns are carried out in two ways:
- Transfer to a bank account in favor of paying off a mortgage.
- Issuance of a notice from the tax office to the accounting office of the applicant. In this case, the money is not returned, and the applicant’s income is exempt from personal income tax in the amount of the deduction.
Conclusion
When obtaining a mortgage, everyone should look far ahead and conduct an objective analysis of their own income. Risks accompany at every step. In this case, you should use the services of trusted insurance companies.
If the benefits of refinancing are obvious, but the bank refuses, then you should contact another bank. But the massive interest in refinancing forces these institutions to reconsider their approach. According to feedback from their customers, some are not ready to give customers to competitors and wish to discuss new lending conditions. It is hardly worth counting on fundamental changes, but there is a theoretical possibility to simplify some indicators.