What to do if you took a mortgage a few years ago and now unwittingly overpay, because interest rates of other banks are much lower? You can take one more credit on more favorable terms in another bank and due to it to repay the previous one – it’s called refinancing. But here the borrower will have to be very careful and just balance between two banks, like between Scylla and Charybdis.

First and foremost, refinancing gives the borrower a real opportunity to reduce his costs by paying interest. Theoretically, the procedure of refinancing proceeds as follows: you take a new loan on more favorable terms, due to it repay the old loan and continue paying for a new loan. But then the question arises: what about the pledge? Because your property has already put in pledge in the first bank where you originally took the loan. Banks that are specially designed program of refinancing just give money and take with you the commitment to put in pledge a flat (or other real property) when you pay off with “your” bank-creditor. However, while real estate has not incorporated the new bank-creditor and it had no collateral, it compensates the risk by higher interest rates.

Now, many banks, wanting to entice borrowers from competitors, is launching refinancing programs, offering customers the very advantageous terms. But before resorting to this method, you need to realistically assess your financial capabilities, as the refinancing would inevitably entail additional costs. These include: fees for loan application, loan fees, a preliminary assessment of property required for the registration of collateral, as well as fees for withdrawal pledge and renewal of a mortgage in favor of the new bank.

First of all, you need to decide: what exactly you want to change, having done refinancing: to change the loan currency, lower interest rate, change the loan term or reduce mortgage payments. And already, based on this, choose the best refinancing program.

If you want to lower the interest rate on the loan (usually it is the main reason for resorting to refinancing), it is necessary first to apply to “own” bank – where you originally took the loan. Even if the rate change is not provided by your contract, many banks are now ready to meet the client not to lose him.

If your bank still refuses to change rates, then why not try your luck elsewhere. You need to secure consent for the early repayment of credit (in some bank for a fee is charged) in your bank in advance.

It must be borne in mind that in the new bank you will have to go through all the stages again – in particular, to submit documents proving your solvency. And the fact that some other bank has already given you credit, it will not mean anything for the new bank. Your credit history for a new bank – is also not an indicator. The property that is subject of the pledge is re-checked again.

Bad loan is a crucial question. Currently lending market offers various options for home refinancing for house buyers. Those who are searching for a smart option like VA refinance, please check out this site where you will also find info about VA refinancing and how to low down payments.

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