You have been paying back your mortgage for some time. The nervous uncertainty associated with servicing the mortgage has long since passed. The loan installments are repaid one after the other. You don’t even remember the exact amount. Do you know that you can save up to several hundred dollars on a monthly basis? How to do it? Due to its amount, the mortgage is taken out for a minimum of a dozen or so or even several dozen years.
During this time, loan price offers will be subject to cyclical changes: once better, once worse – as it is in life. Depending on the scale of the loan, you can save from a dozen to several hundred thousand dollars. Therefore, it is worth considering moving your housing loan to another bank in your plans for the future. Your finances are worth it!
What is mortgage refinancing?
Refinancing is the transfer of a mortgage to another bank on better terms. The most common goal is to lower the installment, change the currency of the loan, extend the loan period or get additional free cash. Such an operation, although not very popular in the country, allows to significantly improve the terms of the liability under certain market conditions. Sometimes we also simply “out of the way” with a bank. We are not satisfied with the quality of service, financial products offered (eg deposits) or even the lack of a branch in a convenient location. Changing the bank can have many benefits in various fields. Be sure to compare your mortgage with current price conditions.
What does it look like in the world and in the country?
The Internet suggests that a refinancing loan in the country is a percentage of around 5% of all loan agreements. Compared with the countries, where loans dedicated to changing the bank account for almost 50% of all transactions, we are very pale. Why such a big difference? Low consumer awareness, relatively small number of refinancing loan offers and historically very low interest rates.
Each mortgage will be refinanced
In my opinion, almost every loan will have a chance in the future to change the conditions for more favorable ones. where do you get that confidence? Below are some arguments. Be sure to let me know in the comment if you agree.
1. Cyclical change of offers
A mortgage is, as a rule, concluded for a longer period, often even for 25 or 30 years. During this time there will be several moments with higher and lower margin levels. Probably every borrower will have a few times the chance to improve their credit conditions.
2. Fixed interest rate
At present, people, having practically no choice, are forced to take advantage of the offer of mortgage loans with a variable interest rate. Banks are slowly preparing to introduce loans with a fixed interest rate. Apparently, the PFSA is working on imposing the obligation to offer loans to customers with a fixed interest rate. If a new trend emerges on the market, it will be an interesting opportunity to change the bank and improve its conditions.
3. Lowering the LTV
During the repayment of regular installments and cyclical increase in the value of your property, your LTV (loan to value) will decrease cyclically. The LTV reduction may mean that you will be a less risky customer. Especially if you go below 80% and 50% LTV, and the banks will be able to offer you better loan terms.
4. Goodbye, bad bank!
Changing the loan can also be considered as a way to improve early repayment conditions, change additional products (bank account, income from salary, credit card, life insurance etc.), obtain free cash or change the bank in general (eg due to unsatisfactory customer service).