Why you need refinancing loans

During the crisis, banks began to raise rates on all types of loans and fines for overdue payments, thus minimizing the risks incurred. When the economic situation in the country was stabilized, interest rates on Bank loans began to decline. In response, enterprising borrowers apply for the loan at a disadvantageous rate, began to look for options to refinance the debt. Can actually benefit and reduce costs, having refinanced the existing loan in other Bank?

 

What is needed for the refinancing of credits of other banks?

The main purpose of refinancing is the full repayment of one loan by obtaining new loans issued on more loyal terms. Refinancing gives the borrower the opportunity to reduce the interest on the loan, to change the currency of the loan and get in debt more than what it was previous to the loan. Refinance can be as large loans (e.g. mortgages, auto loans, etc.), and conventional consumer loans. However, refinancing a large loan is not always profitable, as the cost of the renewal may exceed the amount of interest remaining on the original loan.

The borrower who wants to refinance a loan of another Bank must meet the following requirements:

• to have a good credit history;
• the term of the current consumer credit should be at least 6 months, and for mortgage loans – at least 1 year;
• for the refinanced loan must be current overdue debt.

In General, the refinancing process does not differ from the registration of the original loan. Similarly, the Bank will check the credit history of the borrower and the level of his income (if he fell, the refinance loan may be denied).

What loans can to refinance?

In General, to refinance any Bank loan. The borrower who wants to refinance a current loan, must in addition to the standard package of documents to provide the Bank credit agreement and a statement of the amount required for full early repayment of the existing loan. Also need account details, which will be the transfer of funds from another lender.

When refinancing a mortgage loan without additional documents not do, and hence unnecessary costs can not be avoided. For renewal of a mortgage with another Bank will have to re encumbrance of residential property and record this process in the Federal registration service. Due to constant fluctuations in market prices for real estate, the insurance contract will also need to sign again. Re-registration of all documents and notary services require certain financial costs, which in total will be about 30-40 thousand rubles. That is why experts do not recommend to refinance the mortgage loan, if it has more than 5 years.

If the borrower wishes to refinance a car loan, he should contact a Bank that offers more favorable terms on this crediting type. If the car is in good condition, then it can be re-issued as collateral.

Also to take advantage of refinancing can borrowers apply for large cash loan. With refinancing, they can reduce the amount of payment on a loan or extend credit by issuing an amount greater than that required for early repayment of the loan (the difference is issued to the borrower.