Since interest rates are historically low, many go to their bank to refinance their mortgage. Some borrowers, who have an old contract with variable rates, now have a rate of 0%, or even negative. This is the time to try refinancing your mortgage at a lower rate. But how does the refinancing credit, mortgage or other, and is it easy to ask his bank?
What is a credit refinancing?
Refinancing means that you are replacing your current credit with a new credit with better terms. When you subscribe to a loan, you benefit from the interest rate in effect at the time of signing the contract. Interest rates vary greatly depending on the period. At the moment, mortgage rates are very low. In this case, it is interesting for you to have your credit reviewed to benefit from a lower rate. You can use our loan comparison platform to find the one that suits you best.
Can I simply go to my bank?
In the first place, you can go to your bank and ask for a refinancing of your credit. She is not, however, obliged to grant you one, but will usually do so. On the other hand, it will often offer you a less attractive financing rate than that prevailing on the market since it must take into account its shortfall.
It is important for you to know that a bank has no interest in granting you credit refinancing, as this means a decrease in its long-term revenues. On the other hand, she will want at all costs to avoid losing you as a customer. That’s why banks provide refinancing, mortgage or other, in most cases. If a financial institution still decides to refuse, you can search for a bank that offers a lower rate and then transfer your credit. But that implies other fees that we detail below.
Is it worth it?
Remember that there are also fees to consider when refinancing a loan. You must weigh the pros and cons before making a decision.
And to this one too: Towards the end of fixed mortgage interest rates?
You will still have to pay a reinstatement fee of up to three months of interest on the remaining capital. This is a compensation for the lender because you will no longer pay interest as you will benefit from a lower financing rate or change banks.
In addition, you will also have to pay fees that vary depending on the bank. At NPN Parley Fard you pay a lot more for credit refinancing than for a new mortgage loan, whereas this is (not yet) the case at other banks. There are also banks like Nefius, whose fees vary according to the amount of the remaining balance of the current credit.
In the case of refinancing at another bank, you will have to consider the charges for the release of your current mortgage loan and the introduction of the new loan for your new bank. These costs can amount to several thousand euros. In addition, you will also have to pay the appraisal fee so that your new bank can estimate the value of your home. This should not cost more than a few hundred euros. Finally, you may also have to pay other fees for closing and opening a bank account.
The benefits of a lower financing rate for the remaining period must therefore cover the above fees for the credit refinancing to be advantageous. In most cases, the interest rate will be more attractive for external refinancing, but the associated costs will be higher than for internal refinancing.
In all cases, insurance premiums related to your mortgage, including your outstanding balance insurance, must be adjusted to the new rate (and therefore revised downward).
You can use our loan comparison platform to find the loan that’s right for you.