2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16
Refinancing a mortgage is no different from a similar transaction for any other loan. This procedure is the receipt of a sum of money from a credit institution on more favorable terms to pay off existing obligations. In this case, the initial loan can be taken both from the same bank and from another financial institution.
But not all credit organizations can offer mortgage refinancing. Banks that engage in such operations in the Russian Federation are represented by VTB 24 and Sberbank. While on-lending for other transactions (like a car loan or a consumer loan) can be found in many financial institutions.
Mortgage refinancing is that a new loan is issued, from the amount of which the previous debt is repaid. The property pledge is re-registered to the new lender, and the borrower repays the loan to the new credit institution. As a rule, such an operation is performed if it is possible to reduceinterest, change repayment terms or payment currency. For example, mortgage rates in foreign currency are almost always lower than in rubles. However, wages are paid in Russian currency. With the growth, for example, of the dollar exchange rate, the credit burden on the family budget increases, since it is necessary to convert large amounts in rubles into dollars. Therefore, sometimes it is more profitable to reissue a loan in rubles. You may also be interested in rescheduling a loan for a longer repayment period. Bank VTB 24 in this respect is perhaps the record holder, offering a maximum term of fifty years.
It is better to start refinancing a mortgage at the bank where it was originally issued, as in a number of loan agreements there are pen alties for early repayment of debt or a moratorium on early termination of obligations. If the bank cannot provide the on-lending service, then you can go to another financial institution. At the same time, you need to calculate how much it will cost to get a new loan, as well as decide on the difference in interest rates. The specialists believe that refinancing is inappropriate if the new rate differs from the previous one by less than two percent.
Mortgage refinancing is processed in the same way as a standard loan. Legal entity or individual submits an application, and credit
Institution checks its current solvency. If a person in the credit history had delays on the original loan, thenanother bank may refuse to refinance him, even if he has a fairly high level of income.
The most interesting parameter for any borrower is the refinancing rate. In this regard, a mortgage is a fairly “cheap” financial instrument, since the rates here are about 12.5 percent (for example, in Sberbank). This is due to the large amounts of loans and their long repayment period. While rates, for example, on consumer credit transactions can be 18-20 percent or more.
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