What is mortgage refinancing and bank refinancing?

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Once you sign up for a mortgage, don't put an end to your financial freedom. If market conditions change, the mortgage program can be improved. Especially for this, the concept of “mortgage refinancing” was introduced. The best offers for such programs are offered by modern reliable banks. However, it’s not worth taking just anything - first you need to compare what different financial institutions offer, and only on the basis of a detailed analysis, determine where to transfer your home loan.

Maneuver profitably

To learn how to exchange an existing loan for a more profitable program, you need to know what mortgage refinancing is. In practice, until now, many of our fellow citizens not only do not know that such changes in the payment program are possible, but, in principle, they are poorly oriented in the features of the mortgage program. All this seems dangerous, complex, confusing - in a word, this is a reason to break the head of economists, but not ordinary citizens.

Experts say that currently about 20% of the total population of our country has access to mortgages, although no more than 12% use the opportunity. Those who are aware of their chances, but hesitatewith obtaining a loan, they usually explain the behavior by the following reflections: who knows, what if in the future there will be better offers than what is on the market now? This is where refinancing the mortgages of other banks comes to the rescue, that is, the possibility of obtaining a loan in one structure and then transferring it to another as more successful options appear.

Cheaper is better

Any discount is like a balm for the soul of our compatriots, which is not surprising, given the standard of living in the country. Reducing the interest rate on housing loans is one of those trends in price changes that cannot but rejoice. Over the past ten years, the rate has decreased significantly, and many of those who took out a loan to buy an apartment in 2005-2015 are now scolding themselves with the last words - well, why not wait? Official statements of government officials add fuel to the fire: everyone promises that loans will begin to be issued at 5% per year.

In order not to wait for the promise to come true, you can take out a loan today, keeping in mind that better mortgage refinancing will be available in the future. Experts say that in the coming years, mortgage rates can be expected at the level of 9% per annum, but there is no need to think about a larger reduction yet - the economic situation is too difficult both within our country and in the world as a whole.

Guessing - not guessing

Should one puzzle oneself with economic forecasts when no analysts, even the most experienced and eminent ones, can say with absolutecertainty of what awaits us tomorrow? Perhaps a much more effective option is to buy a home on credit today, bearing in mind that in the future it will be possible to change the bank, and with it the terms of the loan. Many of those who took loans 5-10 years ago have already done so. It is not surprising, because, for example, refinancing a Sberbank mortgage is much more profitable than most of the offers that were in use earlier.

The rate reduction is available to every person who knows how to count money in his wallet and knows the price of it. On-lending, which at first was regarded with distrust by the townsfolk, has gained a good reputation, as people have become more free to dispose of their hard-earned rubles, which are always in short supply.

What is it about?

The Mortgage Refinancing Program of other banks is a financial opportunity used in different situations. It is usually used by those who have already issued a debt for the purchase of housing, but want to reduce the interest rate.

It should be understood that the reduction in payments every month is achieved in other ways, it is not necessary to move from one financial structure to another. It all depends on the desire of a particular person. Of course, refinancing the mortgage of other banks is a convenient option, especially if the amount of payment per month for the borrower suddenly turned out to be unbearable. But you can try to negotiate with the managers of your bank in order to increase the duration of the loan program. On the other hand, for example, when working with VTB 24, mortgage refinancing can be a source of additionalfunds, since the bank often lends a large amount - it can be used to repair or buy furniture, or for other family needs.

Don't rush into the pool with your head

The fact that many people have not yet understood what mortgage refinancing is, significantly limits the spread of this practice. Additional complexity creates the complexity of the procedure. To break up with the old bank and move to a new one, you will have to issue a number of official papers, which requires time and effort. On the other hand, the effort is worth it, since most banks offer (for example, VTB 24) mortgage refinancing, for which you will have to pay much less. As the saying goes, the persistent wins.

How did it start?

For the first time in practice, Fosborne Home clients learned what mortgage refinancing is. It was this bank that launched such a procedure back in 2007, hoping to lure clients from other, less profitable financial institutions.

The firm was then a leader in mortgage brokerage. Its analysts have developed an interesting proposal, which, in principle, did not exist on the domestic market before. It consisted in providing those who had already taken out a loan to buy a home, more favorable conditions if they agreed to change the lender in favor of Fosborne Home. The offer quickly attracted the attention of a wide range of people, and soon banks of various sizes and levels of reliability began to offer mortgage refinancing.

Leave or stay?

It would seem, what is mortgage refinancing? The ability to keep all the privileges, but get away from high interest. And yet, the program, having become available to a wide user, did not begin to enjoy popularity.

There were several reasons at once. To reissue a loan, you need to re-evaluate the object for which you receive a loan, as well as make a new insurance policy. Additionally, you may have to redo the documentation package - it depends on the specifics of a particular case. In addition, the very first mortgage broker in the Russian real estate market asked for 8,700 rubles for his services. Of course, when choosing a profitable bank, refinancing a mortgage brings great benefits, but this is all in the future, and you had to pay right away. And the difference in loans was no more than one and a half percent. All this together looked like a rather pointless running around for a penny.

The situation is changing

Today, when the financial giants of the market started refinancing mortgages (Sberbank, VTB, other reliable banks), the program began to look more simple and affordable. At the same time, you need to understand that moving from bank to bank with a loan is beneficial primarily in the case when the interest rate difference is two percent or more, and the repayment period is at least five years. If, suppose, only a year or two remains to be paid on a loan, then a change in the financial structure will not only not pay for itself, but may also become more costly than stable work with the previous one.bank.

On examples

Suppose a citizen took out a $100,000 mortgage from a bank for 15 years at an interest rate of 12.5%. Let's also assume that after two years another bank offered its services on the market, where the interest rate is only 9%. The citizen applied and was approved, which reduced the monthly payment by $168. Over 13 years of monthly payments, the savings are $30,000. The effect is obvious. It is also obvious that if the loan has been repaid under the old conditions for 13 years, the benefit from switching to two years will give very little and will be lost in the running around with paperwork and revaluation.

Do it all yourself: is it necessary?

So, refinancing the mortgage of Sberbank (like many other large banks) looks like a profitable procedure, especially if you do it on time. At the same time, many are afraid of the difficulties associated with changing the financial structure. Can they be avoided?

Modern mortgage brokers are ready to offer potential customers all the conditions, if only they switched to them. The broker can solve organizational issues for financial reward; its value is (usually) within reason. This aspect is one of the beneficial aspects of refinancing the mortgage of VTB, a bank that offers very favorable conditions for the transition. By the way, if at the beginning of the appearance of such offers, changing a creditor cost at least a thousand US dollars, in recent years it costs about a hundred rubles (but you will have to pay an additional fee for a new one).insurance and home revaluation).

What to expect?

Currently, VTB, Sberbank and other large, well-known financial organizations specialize in refinancing mortgages. What can I say, almost all companies offering mortgage loans are trying to lure customers from competitors, which obliges them to offer a refinancing option. The number of such players in the financial market is growing from year to year. Of course, this gives the end client a choice, but at the same time, it confuses people and does not allow them to navigate in such an extensive list of offers.

At the same time, the refinancing of the mortgages of Sberbank and some other companies turned "the other way." Banking structures that want the client to stay with them offer a change in the loan program if the borrower has looked after something more profitable for himself than his previous conditions. That is, in the end, you can achieve a reduction in the interest rate without paperwork, overpayments, running around, revaluations.

Development: step by step

As they say, you just need to start the process, and then the development will go by itself. This is exactly what happened with the mortgage refinancing program. Sberbank and other sharks of the banking market, trying to increase sales, taught customers to choose what is profitable and reliable, and the modern layman understands that he has the right to seek favorable conditions.

Save on interest, adjust the timing of the loan repayment to the bank -modern people have learned to work with these tools, achieving benefits for themselves. People gradually master different tools and learn to calculate what will be most useful for their family budget. Many people also know that the market price of a property collateral under a loan program is growing from year to year, which is also a reason to ask the bank for more favorable conditions. This means that you cannot fool a modern person on chaff, the main thing is not to be lazy and understand the features of each banking product in which you have a chance to take part, without fear of new information.

Summing up

So, is it worth waiting for the mortgage lending program to become cheaper? The practice of recent years shows that such behavior has no economic justification. It is already clear that when more profitable loan options appear, you can simply change your bank for another and in no way worry about hard-earned rubles. And this means that you can safely choose housing today, counting on the most convenient conditions for yourself both in the present and in the future.