22 Jan. Refinance mortgage loans is beneficial to both banks and debtors. How refinancing works in this field and how to do it just to get the most attractive terms – in these and other matters decided to find out the correspondent of "Political class".
The decline in mortgage interest rates, expected in 2018, could lead to a significant increase in the share of refinanced loans in the total volume of mortgage loans. At present, the refinance mortgage loan is drawn every 5th of the borrower.
Lower interest rates will contribute to a number of factors:
- the reduction of the key rate;
- the high level of competition among the major players in the mortgage market;
- the introduction of electronic documents for registration of mortgage transactions.
Also on the interest rate is influenced by the Bank shares. In this case, enhanced the migration of mortgage borrowers from one Bank to another. In 2017, this trend has become so noticeable that the banks had to take measures to preserve high-quality borrowers for its mortgage loans.
The benefit to banks
Refinancing borrowers of other banks – always mutually beneficial deal. Banks are interested to obtain high-quality borrowers, which have proved the solvency in the payment of the existing loan. Most programs refinancing provides strict requirements payment history (no late payments within a certain time). Thus, when refinancing the existing loan, the banks get paying customers, which is beneficial to the quality of their portfolios.
Given the decline in rates on loans to refinancing the reduced burden on the borrowers, which further reduces the risks of non-payment of this loan. In addition, an additional guarantee is the fact that the collateral has been previously validated (accredited) by another Bank. The process of obtaining a mortgage loan to refinance the Bank more quick and simple than the transaction of sale and purchase with a mortgage loan, because when you refinance the only party to the transaction is the borrower, which reduces the time for the operation.
As for the refinancing of foreign currency mortgage, with this procedure, the principal balance is recalculated into rubles, on this basis, the Bank determines the adequacy of the borrower's income for repayment of the loan.
The interest rate on ruble-denominated loan to refinance the loans issued by another Bank, sometimes even higher rate of foreign currency loan. This entails increasing the burden on the borrower when servicing a new loan. However, the refinance foreign currency mortgages in rubles and has undeniable advantages. In particular, disappear the risks of foreign currency: when currency, the monthly payment on ruble-denominated loan will not change, while in foreign currency loans, the payment amount in rubles will grow.
With regard to the refinancing of foreign currency loans granted by the Bank, as a rule, this process is determined by banks individually. The borrower can offer different options, such as conversion into rubles at a certain rate with changes in other parameters of credit or obtaining new credit in rubles, which will be used to repay existing foreign currency loans.
One can say unequivocally that when deciding to refinance a loan, especially currency, the borrower should seriously evaluate all the terms of this procedure and to assess the possible benefits of refinancing with all the resulting costs % difference costs when applying for a loan, and so on.
How to refinance a loan
The maximum benefit from a refinance loan can be obtained in the case, if the borrower applies for refinancing in the first half of the loan period. The longer the term, the lower the savings. To illustrate, consider a simple example.
- the loan amount is 2 million;
- term – 10 years;
- rate – 12%.
Monthly loan payments (annuity) will be 28 694,19 RUB the Estimated overpayment for the entire term of the loan will amount to approximately 1.44 million RUB take into Account that repayments were not, and the term of the new loan will be equal to the remaining term of the existing loan. The loan rate for refinancing to 9.5% per annum.
Option 1: loan refinanced after 1 year after issuance
The refinanced term loan 9 years. The amount of the new loan equal to the principal balance of the existing loan: about of 1.89 million RUB, the amount of the payment on the new loan will be about 26 099,69 RUB resulting In savings of approximately 311 thousand.
Option 2: loan refinanced 8 years after issuance
The term of the new loan is 2 years. The amount of the new loan equal to the outstanding principal balance under the current credit of approximately 631 thousand RUB amount of the payment on the new loan will be about 31 502,11 RUB, with the result that the interest savings will be approximately 67 thousand rubles. But this benefit is almost completely trumped by the need to obtain a new insurance, the valuation of real estate and mortgage transactions.