When Is It Worth Refinancing A Mortgage? – Finance

 

Every person who has a mortgage is perfectly aware of the fact that it costs a lot. Therefore, even before we make such a loan, we are looking for a bank that will offer us the best financial solutions. We just want to give the bank as little as possible each month. However, it may turn out that the most advantageous offer when we took out a loan is not so attractive today and other banks have much lower interest rates. Do we still have to pay higher installments? Of course not. We can take advantage of the refinancing loan, thanks to which our monthly installments will be reduced.

What is the refinancing loan? Simply put, it is the repayment of your loan to others, which is currently more profitable for us. However, before we take such a loan, we have to analyze everything well. Why? For what seems at first glance an attractive offer, it does not have to be that way. Let us assume that we have found a loan whose terms are much better than the ones we currently have. At least that’s what we think. However, before we transfer the loan to another bank, let’s check whether we will not pay a commission for granting a new loan, if the bank in which we now have a loan does not charge us for early repayment, what are the costs of establishing a new security, etc. It may turn out that although the interest rate on the loan you want to incur is lower, but the remaining costs will be higher than the possible profits. And then it is a waste of our time and energy. This solution only makes sense if we want to extend the debt repayment period to pay lower installments in the month. But if we only want a longer repayment period, we can also go to our current bank, where we can also negotiate the extension of the repayment date. Signing an annex to the contract, extending the repayment of debt, will certainly be cheaper in this case.

If we are considering a consolidation loan, we must realize that we will have to pass almost identical procedures as in the case of the first loan. So the bank will check our creditworthiness as well as the credit history accumulated in the Credit Information Bureau databases. It is a time-consuming process that requires some effort from us. But sometimes it is really worth it. If we find an interesting offer (banks from time to time offer special promotions), you can save a lot of money. And none of us like to overpay.

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