Refinancing the loan means transferring the amount due to another bank . From the moment of refinancing, the client terminates repayment of the debt in the existing bank and the obligation begins with the new bank of his choice for the next period. The most common reason is a lower interest rate or a reduction in repayment due to the extended maturity of the loan .
When to refinance
Most banking institutions can refinance (with the current interest rate guarantee) up to 12 months before the end of the fixation you have with your existing bank. Some even only 6 months in advance.
ATTENTION! Yet there is one way to book existing, still low interest, up to 3 years in advance! Savings by using this alternative can go to hundreds of thousands at the same time as interest increases!
What can be refinanced
Partial repayment of the loan Read article 1 / Building savings loan – here pay attention to the difference between “regular loan” and “intermediate loan or bridging loan”
2 / Consumer credit – it can be called as non-purpose
3 / Mortgage loan
1 / Reduction of interest rate and hence total overpayment
2 / Extension of maturity of the entire debt obligation
3 / Increase current debt with additional finance
4 / Other reasons – change of pledge, removal of co-debtor or guarantor, change of debtor etc.
Choosing a suitable refinancing loan
The suitability and type of credit should be discussed individually with a financial expert. Very often, the current bank can withdraw from the expensive conditions. However, this is only possible if a competitive / cheaper bid is submitted. Therefore, it is advisable to go through more options with a financial expert and then push individual banks to more interesting conditions.
It often happens that a home bank, where a person has an account for years, treats his long-time client stepmother. Conversely, another foreign institution will create conditions that are not refused.
Given the number of banking institutions on the Czech market, offers are like mushrooms after a warm rain. It is necessary to have a comprehensive financial expert so that the selection does not take much work and the result pleases the household budget.
Savings of such transactions can go up to tens of thousands. The advice and service of a real advisor is priceless.
A look at the repayment period and the terms of the new loan
The repayment period and the amount of monthly repayments are closely related. Therefore, each person should determine it himself. But what to insist – it is possible at any time to allow early repayment of the loan. At least significant parts. Of course free of charge.
Practical example: Mortgage refinancing with non-purpose increase
The young couple has been repaying a mortgage loan with an interest rate of 3.5% pa and a maturity of 20 years for the fifth year in a row. For further reconstruction and retrofitting of his apartment he needed to borrow additional funds. As part of refinancing, the interest rate of the new bank was 1.69% pa + a non-purpose CZK 200,000 for equipment. The total interest burden was significantly reduced, and clients also used the mirror mortgage system to save additional money.
Benefits of meeting a comprehensive loan specialist
- Non-binding and free consultation
- Find all energy saving options
- Settle administration in one place
- Discuss possible combinations you will save on
- Calculate multiple banking houses for easier orientation without losing your precious time
- Select the bank that best suits your requirements
- You do not have to circulate the banks and find out the differences and make a difficult analysis