The credits became a part of the life of people for a long time and they are offered by banks on different conditions. If there were difficulties with calculation of the having loans, then it is possible to carry out refinancing of the credit. This service has a number of important advantages, but also features which are important for considering to receive only benefit.
What this refinancing of the credit?
Understand repeated granting money as this term on credit to extinguish earlier taken loan. If to consider refinancing from the legal point of view, then it will be the target credit, that is the received money can be used only for repayment of the available debts. It is possible to issue refinancing in such cases:
- In the current loan interest rates are overestimated, and renewal will help to save on overpayments.
- For the purpose of combination of several contracts in one not to be confused and know the total amount of debt.
- Reduction of monthly payment as crediting term will be increased.
Refinancing and restructuring – in what a difference?
Many confuse two concepts connected with the credits – refinancing and restructuring. Dealt with value of the first concept, and here the second program means change of a payment schedule on a loan. The interest rate of payments can be for this purpose reduced or will stretch the credit for longer term. Finding out, than refinancing and restructuring differ from each other, it is worth noticing that the last operation is more favorable to banks. Besides the fact of restructuring has negative effect on credit history.
Refinancing of a mortgage loan
Banking systems offer two ways of carrying out refinancing of a mortgage:
- Change of bank pledgee. There is a reduction of a mortgage loan in comparison with primary sum.
- Apartment conclusion from under pledge. The person a beret a consumer loan without pledge to extinguish mortgage. The loan increases, but the apartment will be at the full order of the borrower.
Finding out that such refinancing of a mortgage, it is worth specifying that it is possible to change the credits conforming to certain requirements:
- There should not be delays of payments, as for and the current debt.
- Refinancing of the credit cannot be carried out before half a year of its action. A number of banks have restrictions on the loaning up sum, that is on an initial mortgage the client has to pay 20-50%.
- It is impossible to carry out the procedure if before the termination of a mortgage there were less than three months and if the credit was earlier re-structured.
Minimum refunding rate
Let's begin with terminology, so, understand percent which the creditor receives from the borrower for receiving money as a rate. The size of an interest rate is presented year on year. Knowing as there is a refinancing of a mortgage or other credit, It should be noted that the rate directly influences prepayment level therefore at first it is necessary to pay attention to it. The financial organizations determine its size independently. In most cases the client is told the minimum rate, and in most cases it makes 9-10% per annum.
Refinancing – pluses and minuses
Each banking service has positive and negative sides. Refinancing of the credit has such pluses:
- Reduction of the amount of monthly payment happens it due to increase in period of validity of the agreement.
- It is possible to replace crediting currency that is relevant against the background of inflation.
- Reduction of a rate is possible that national economy regularly changes and banks can offer more favorable terms.
- It is possible to connect the credits which are available in the different financial organizations on different conditions.
To understand whether it is favorable to agree to carrying out operation, it is necessary to know also minuses of refinancing:
- Operation is unprofitable only for small loans.
- It is necessary to incur additional expenditure, for example, the commissions, penalties and so on.
- For refinancing of the credit it is necessary to get approval of the "old" creditor.
How to make refinancing of the credit?
At first it is necessary to choose financial institution where there will take place loaning up. For this purpose it is worth seeing the bank websites to choose for itself the most favorable offer. There is a simple instruction how to make refinancing:
- On the website of the chosen bank it is necessary to make the application then the preliminary decision on a possibility of carrying out this operation will be received.
- Finding out that it is necessary for refinancing of the credit, it is worth specifying that if the application was approved, then not later, than in three working days it is necessary to come to the bank organization where there are open credits. It has to give the reference from the section "Data on the Refinanced Credit".
- Carry the prepared folder of documents in the chosen bank where data will be checked some time, and the final decision on refinancing of the credit will be provided later. In most cases it occupies three working days.
- After that the person has to come to office to sign the new credit agreement. The bank organization issues documents and the schedule on repayment of the new credits.
- Through five worker of days certificates of closing of the previous contract have to be received.
Documents for refinancing
If the application is previously approved, then it is necessary to collect the package of documents where has to enter:
- The original of the credit agreement signed with the first bank and the payment schedule.
- The reference from the bank issuing a loan in which specify details for transfer of money to the creditor, data on delays (their size and duration) and total sum for settling with the previous creditor. Consider that the reference works only three days.
- Documents for refinancing of a mortgage or other credit include the consent of the creditor to refinancing. She has to be provided at least one week prior to estimated date of repayment of a loan.
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