Refinancing - is a loan with a lower interest rate to repay the loan with a higher rate, taken earlier. In the face of declining mortgage rates, a borrower can successfully use this tool to reduce the overpayment for housing purchased on the mortgage.
In countries where the mortgage has a longer history than in Russia, refinancing is widely practiced. And this operation is profitable even when the difference of the old and the new loan interest rates in the tenths of a percent. In our country, refinancing becomes effective when the difference in the interest rates of 2-3%, as getting a new mortgage involves considerable additional costs.
You can avoid a significant part of the costs, if the refinancing exercise in the same bank that issued the original mortgage. But banks are very reluctant to lower interest rates on mortgage contracts concluded earlier, as it reduces their income from mortgage lending operations. You can try to get to the other bank decision to grant a mortgage loan at a lower rate, and present it to his bank to the creditor as an argument for loan modifications.
In the event of a change in the lender lending, borrowers face a number of problems. Firstly, there may be additional costs in the form of bank charges (for application review, for the issuance of credit, and so forth.). Secondly, the need to re-pass the procedure of assessment of housing mortgage and insurance, as each Mortgage Bank is working with its partners, evaluators and insurers. Third, it should be noted that the requirements for mortgage housing at different banks are different, and the housing, which was approved and credits for one bank may be rejected by another. And fourth, we must remember that the credit history of the borrower must be flawless.
No matter, whether the change when lending to the creditor bank or not, the borrower will have to bear the costs associated with re-registration of the mortgage and notarization of the transaction.
In Chapter 7 of the Law "On Mortgage" it says: "property mortgaged by a mortgage agreement to secure the fulfillment of liabilities (previous mortgage) can be provided as collateral to secure the fulfillment of other obligations ... to the same or other mortgagee (subsequent mortgage)." That is, according to the law, the borrower a mortgage loan has the right to re-pledge of mortgage housing that meets the objectives of lending. But in practice, the borrowers often have to operate under the scheme: first, pay back the loan from the original lender - then remove the lien encumbering a property - and then get a new mortgage loan and build new housing lender.
Lending program for a specific region, you can choose to "mortgage program."
If none of the bank's lending program is not reached, the initial maturity for a mortgage loan will have to take a short-term unsecured loans, and then repay them ahead of time at the expense of the new mortgage. Interest rates on consumer loans is 5-10% higher than the mortgage, and the difference is noticeable when lending to an additional expense. This can be avoided if the borrower has in the property has any property that can be laid for a new mortgage.
And yet another embodiment of lending - is to use a mortgage broker. In this case, the new mortgage can be obtained from the old settlement. A mortgage broker acts as a guarantor to the bank issuing new mortgage loan for a period of re-registration of mortgage housing. mortgage broker service cost is from 10,000 to 60,000 rubles. This amount is quickly recouped if the savings on your monthly mortgage payments will amount to 4000-6000 rubles.
Simple and convenient mechanisms for mortgage lending are just beginning to take shape in Russia. But soon refinancing becomes normal practice, the services of the borrower will be lending a lot of options and it is not one they will use for a long period of mortgage lending.