Due to the unstable situation in the country, an increasing part of the country population uses the refinancing program. Refinancing means a new loan, which is issued to cover the old, but at more favorable conditions for the borrower of funds.
Why does a client apply to a bank for refinancing a loan?
Refinancing is a rather complicated program, and in order to extract all the benefits from it, you need to at least somehow understand lending. If there is no knowledge on refinancing, you can contact a specialist to explain where, how, and under what conditions it is more profitable to take a loan for refinancing.
- Strict conditions for repayment of the existing loan, because of which the borrower can not pay the loan on time. The bank takes large commissions or a high interest rate. People who take instant loans for urgent needs usually fall into this situation, and when the situation changes, a person tries to get rid of him in every possible way.
- It is necessary to combine in one loan, other loans. At the same time, the lending period increases, monthly payments become smaller, the interest rate is lower, and one loan is easier and faster to track than several.
- Mortgaged property can be exempted from bail, since often mortgaged property needs to be sold, but it is mortgaged and it will not be possible to do so.
- Ability to change currency loans.
- Reduced monthly payment amount.
Cons of refinancing
- We will have to reaffirm our solvency, despite the fact that the bank, in which there is a loan, has already done this. It does not even take into account that the borrower pays the loan on time, a positive story is very good, but the borrower is checked again as if he did not have a loan.
- That property, which was a guarantee, is checked again, and does not take into account the fact that the previous bank has already checked it. Here it will be necessary to spend money on paying specialists who will be involved in the verification of property, but if, after verification, the bank refuses a loan, the bank will not reimburse the costs.
- It’s a shame that even after providing all the certificates and payments, the bank may refuse to issue a new loan, and in the meantime both time and money have been spent.
Even if the bank guarantees that a refinancing loan is accurately issued, it is necessary:
- Submit an application.
- Some banks charge a fee for considering the application and for issuing a loan, that is, various fees will have to be paid.
- Payment for the work of specialists when evaluating an apartment.
- Also, for an apartment or house to be a guarantee, it is necessary to collect various supporting documents
Tricks, thanks to which the bank can make concessions and lower interest on the loan. If you decide to take a new loan, in order to pay off the old one, and reduce costs. After the loan has been approved, and the decision is up to the borrower whether he will take the money or not, take a certificate stating that the loan has been approved. With this certificate, you go to a bank with a loan and show that you can cover the loan immediately, while the bank will lose interest and ask to lower the rate, the bank can make concessions and lower the interest rate, since it has great benefit from loan. Even if you manage to reduce the rate by a couple of percent, this is a big plus, because if you take a new loan, there will be additional costs, but here there are no additional costs, and the loan has become more profitable.
The benefits of refinancing
- The credit load decreases, the previous loan is repaid, the conditions of the new loan are better, the monthly payment is less, the expenses are less.
- It will be faster to get a loan for refinancing by maturity than usual, since the bank is aimed at repaying the loan, and it is not profitable if the client has an increase in debt at the time of consideration of the application.
- You can mortgage property.
- It is possible to combine several loans into one more advantageous.
- If a client repays a loan ahead of schedule, he will definitely have a positive credit history, which may come in handy in the future.
- The list of documents provided includes only important ones.
From all this, it should be said that refinancing has more pros than cons, which is why refinancing is becoming a popular program.