If you are repaying a mortgage for a long time, but you are not satisfied with the terms of its repayment, the amount of the monthly payment or the fees, reach for the possibility of refinancing the mortgage.
What is mortgage refinancing?
Mortgage refinancing is the transfer of an existing mortgage from one bank to another, which will offer you a more advantageous and faster repayment of the loan. The main reasons for transferring a mortgage are to save a higher amount of money on interest and fees associated with its repayment, obtain a lower interest rate, change the amount of monthly payments, combine several mortgages into one or the possibility of its total, early repayment.
When is refinancing appropriate?
You can apply for a mortgage refinancing at any time. However, it is very important to realize that if it is during the fixation period, you will not avoid high fees or fines for early repayment of the mortgage. Therefore, the most common refinancing takes place at the end of the interest rate fixation period , when you can repay the mortgage free of charge. Just before its end, the bank will offer you new conditions for the next fixation period. If they don’t suit you, you can look at other banks.
What to focus on?
Many people make decisions based on interest rates alone. However, this is just one of the parameters you should look at. It is also necessary to check the amount of the monthly payment, the possibility of shortening or extending the loan maturity, the amount of fees / mortgage repayment costs and the amount that you could save under the given conditions.
Mortgage refinancing procedure
Just as when arranging a mortgage, it took some time to request, furnish and approve it, so it is when refinancing a mortgage. According to experts, you should start approximately 4 months before the end of your fixation period.
Do a survey
The market for banks offering mortgage refinancing is large enough for you to be able to choose the offer that best suits your current situation. Set your preferred benefits and follow them. Contact the banks and wait for what they will offer you. By law, banks are obliged to guarantee new interest rates at least 2 months before the end of the fixation period.
Prepare your documents
Based on the offer you choose, prepare the necessary documents such as:
- Completed refinancing application for a new bank
- The original mortgage agreement (if you want to repay several loans at once by refinancing, then all agreements are required)
- Proof of income
- Expert opinion (many banks accept opinions that are up to 5 years old)
- Extract from the real estate cadastre
- Current amount of loans confirmed by the original institutions
- Consent to early repayment of a mortgage from a bank or original financial institution
- Identity document
Each bank requires different documents, so you may not need all of the above documents in your particular case.
Don’t forget your bank either
Before you exchange your bank for a new one, submit its bids from a competitor. The bank, in an effort to prevent the loss of the client, can offer you the same and sometimes even more advantageous offer. In that case, all you have to do is agree and thus avoid the obligations associated with the transfer to another bank.
Consult an expert
The process of refinancing a mortgage is not easy, so if you are in doubt about choosing the right new offer, consult a mortgage adviser. The advisor is familiar with this area and can give you valuable advice that will facilitate the entire process of handling, communication and administration with banks.