Refinancing loan – what is it and when is it worth taking?
November 24, 2018
Mortgage loans have it to themselves that they are incurred for a dozen or even several dozen long years. That’s why you probably know that the financial market is dynamic and what was current today may be of no value in time. In the end, there may be better offers, but also sudden liabilities in the form of a cash loan. Then often not the cheapest offers decide, and the most easily available. What solution? A refinancing loan is a good idea.
Refinancing loan – and everything is clear!
Many people refinance loans can be closely associated with a consolidation loan. Nothing more wrong! Yes, there is some similarity between them – but the consolidation is based mainly on the combination of various types of obligations – loans, loans, credit cards into one whole! On the other hand, refinancing is a way to transfer a specific liability from one financial institution to another. In addition, it must relate to the same purpose for which the debt was incurred! So in the case of a mortgage, the security will be real estate, and the car loan will be secured by car.
This means that if you think your mortgage is not very profitable, you have the right to try to refinance it – that is, cover one loan with another loan. We all know that we love to make commitments – especially consumer ones. The Credit Information Bureau announced that at the beginning of 2018 over 630,000 were granted. consumer loans, for a total amount of PLN 7.5 billion. We borrow for current, but also unexpected expenses, for a dream holiday, the desired renovation of the living room or for occasional events. But what if the repayment obligation is slightly unprofitable? Can anyone apply for loan refinancing? Well…
… Not everyone can take advantage of a refinancing loan!
In the first place, people who have a mortgage on their account and are not satisfied with the terms of the contract can apply for refinancing payments. Especially when the monthly installment is definitely higher, compared to other offers or is distinguished by a high margin for granting the mortgage. The incentive to change the lender may also be unsuccessful negotiations regarding the reduction of installments or low quality of customer service. Therefore, if you are one of the dissatisfied consumers, seriously think about the option of changing the bank.
The situation is different in the case of cash loans. Here, the situation does not look so rosy. As for now, refinancing loans in this area is not very popular – that’s why the final decision rests on the bank. A much more “taken” method is the consolidation of loans.
The best conditions for refinancing the loan
As you probably guess, the financial market is a place of constant changes and updates implemented by banks. All this to keep as many customers as possible. Therefore, nobody should be surprised that favorable offers can appear overnight. Remember, however, that before making a final decision you should always pay attention to the basic factors such as:
- APRC – ie Actual Annual Interest Rate
- WIBOR 3M – the interest rate at which banks provide liabilities to borrowers
- Banking margin
Although the first element – you, as a borrower, you have no influence, it is already on the bank margin – as much as possible! This, in turn, translates into a lower interest rate on the loan, and thus a lower installment of the obligation. In this case, the recipe for success lies in good and skilful negotiations with the bank, thanks to which you can “win” favorable conditions.
Refinancing a loan is a good option when you have several mortgages. Of course, it is prudent to look into the contract and see if it is possible to transfer the loan. It is also worth conducting a scrupulous market analysis and comparing the offers of various lenders. Nevertheless, irrespective of the amount of the obligation – a refinancing loan will certainly allow you to lower the monthly installment of the mortgage!
A reasonable refinancing loan is essential!
The benefits that result from a refinanced loan are significant depending on the purpose. Therefore, when deciding on your first commitment in life, it is not worth making a decision at first to change the offer. You must know that the refinancing attractiveness is not only connected with a lower monthly installment, but also with any additional fees that you will have to incur as a borrower. When choosing a refinancing loan, pay particular attention to:
- Commission of the bank that will refinance
- Court costs (change of mortgage in the land and mortgage register)
- Fees related to securing the mortgage
- The fee for faster repayment of the transferred liability
Refinancing does not always pay off…
Remember – the key to success is determination and willingness to change the lender! However, it is also worth paying attention to lurking traps. A refinancing loan is a magical product that, despite tempting advertising, is not always beneficial. Bank, like any other lender counts on profit, and the source of income is your money for him! Therefore, before making the decision to transfer the loan, pay attention to the total refinancing costs. If you add various fees such as: commission for early repayment of the obligation, the need to set up an additional credit card, re-evaluation of the property or a fee for the annex to the contract, do not get caught with the sun hoe, because refinancing costs, in this case will not be cheaper.