Refinancing of mortgage loans has appeared in the market of services of bank more recently. There is other name of refinancing – loaning up. That is, simply speaking, if the borrower has a mortgage loan they can extinguish it, taking the credit for other conditions in new bank.
What is the essence of refinancing? Loaning up is necessary that the benefits amount under the credit received earlier has decreased. For example, initially crediting was arranged under 14 % annual, and after refinancing the interest rate will decrease to 11 % annual. Benefit from loaning up is essential, when the difference between credits constitutes from 1,5 to 3 %.
Conclusive value has refinancing mortgage loans in that case when it is necessary to reduce or increase terms of return of a mortgage. For example, monthly payment constitutes 4000 dollars for term of twenty years, and interest rate reduction will reduce term of payments to some years without change of the sum of monthly payment.
The bank which began to loan up your indebtedness before other bank, in exchange receives the obligations more favorable to you. In this case bankers are assured of your decency and ability to meet payments.
Some credit cannot be the subject of refinancing: the crediting arranged on acquisition of apartment in a new building is impossible to refinance as the ownership right on it isn’t registered and there is no pledge subject. Frequently, such credits stand out the banks which are partners of the builder.
It is impossible to refinance a mortgage if in the bank agreement there is a point on a prohibition on loaning up in other bank. The bank permits refinancing only in the event that it isn’t forbidden the law or the agreement. If loaning up is arranged informally refinancing is possible. If the credit in other bank took on the security of other property or without pledge the first credit is extinguished at the expense of means of other credit more favorable to the payer. Anyway, it is necessary to study the bank agreement attentively: in it prepayment penalties of the credit enough can be provided the considerable sizes.
Refinancing of a mortgage will demand from you a packet of documents for credit issue. Other bank which will refinance your payments, anew will consider real estate documents, confirmation of ability to meet payments of the borrower will demand, and also can conduct an estimation of the object of a mortgage at independent experts.
Besides, the new credit agreement will be notarially assured and it is a subject to the state registration. Some banks before registration of the new agreement with the borrower increase a loan interest rate. That is, registration will demand a lot of time and forces, moreover and the result of all efforts isn’t warranted. Also from you can be taken payment for registration of the request for the credit in new bank: it is needless to say that in default nobody will return money.
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