Mortgages are in most cases liabilities for a dozen or so, if not for several dozen years. During this period, the financial market changes radically, and with its mortgage offers.
Sometimes, soon after you make a commitment, you discover much better offers. What to do then It is worth considering a refinancing loan.
First of all, a refinancing loan is not a consolidation loan, although due to some similarities, many people confuse both financial products.
A consolidation loan is most often used to combine liabilities: various types of loans. In turn, a refinancing loan is a solution that allows you to transfer your liability from one bank to another.
Refinancing loan – who can take advantage of it?
Refinancing loans can be taken by people who have a mortgage. The essence of such a solution is the conversion of one liability into a loan with definitely better terms. By design, these are solutions for people who for various reasons are not satisfied with their current commitment.
If you belong to the group of these borrowers, it is worth that you sit down earlier with the loan agreement, analyze your commitment and compare it with other offers on the market. Current mortgage offers can be found on our comparison website or by clicking on the banner below.
When is the loan refinancing profitable?
A refinancing loan is a repayment by means of another commitment, it is a popular solution. The financial market is dynamic, which is why the chances of a clearly better offer appearing are possible in a very short time after taking a loan.
Remember that the amount of your monthly mortgage is based on factors such as:
- interest rate,
- 3M WIBOR,
- Bank margin.
Although you have no influence on the first factor, the amount of the margin depends on the contract you have negotiated with the bank.
And it is on the bank’s margin that you can “win” a lot when it comes to reducing the cost of your monthly mortgage commitment.
Even if your loan was granted on good terms when you signed the contract with the bank, you are still not sure that there are no better offers at the moment. Where to look for the best mortgage offers? Follow our monthly rankings.
You may want to consider refinancing your loan if you have several mortgages. Depending on the design of the contract, this may be a good option if your earnings have improved and you want to pay off your debt faster. Regardless of your commitment, a good refinancing loan will allow you to reduce your monthly mortgage installment.
Credit refinancing – what to look for?
If you complain about the terms of your commitment, then just like when choosing your first loan, it’s not worth rashing refinancing. It is prudent to check as many offers as possible and carefully analyze the components of the offers step by step.
Remember that the attractiveness of a refinancing loan depends not only on the lower price of the new loan but also on all additional fees that you will have to incur when deciding to transfer the liability. The group of costs of servicing new debt usually includes:
- Commission of the bank that will grant the refinancing loan,
- Fee for the earlier repayment of the transferred liability,
- Court fees required (change of mortgage in the land and mortgage register),
- Fees related to securing a new loan.
Only after taking into account all the costs mentioned can you find the given refinancing loan offer attractive.
What to do if the refinancing doesn’t pay?
If you have thoroughly checked the offers of banks that grant refinancing loans and you know that this type of solution will not bring you measurable benefits, it is worth deciding to renegotiate your liability. Remember that not every bank can agree to such an operation, but it’s always worth trying.
If you have enough determination to try to change the terms of the offer, remember that this is just the beginning of the road.
Each request for renegotiation of the mortgage is considered individually, so you are not sure that the bank will invite you for an interview at all. When this happens, you can collide with a polite but firm “no” or receive a proposal tied transaction.
If the bank is willing to reduce the rate that appears on your loan agreement, it may be a condition to use additional products. Remember that a smaller installment for a mortgage is not always profitable when, for example, you have committed to using an expensive credit card.
Another trap during renegotiation can be a fee for an annex to the contract and a re-valuation of the property on which you purchased the mortgage.