What is loan refinancing in simple words? Mortgage refinancing legislation Loan refinancing law

May 2019

Banking organizations constantly update interest rates on loans. It is because of this that in some cases it is beneficial to use loan refinancing. What is loan refinancing in simple words, and how is it processed? The answers to these questions can be found in this article.

Why do you need loan refinancing?

The whole point of the refinancing procedure is that the borrower is given a cash loan to pay off an existing debt. At the same time, the new loan is issued on different terms, which in most cases are more favorable than before. Thus, this procedure will be useful to the borrower if he currently has a loan, the interest rate of which significantly exceeds today's offers. In addition, refinancing can be useful when a person finds himself in a difficult life situation and cannot deal with his debts, and his creditor refuses to restructure the debt.

Loan refinancing law

Before submitting an application for loan refinancing from a bank, the borrower is recommended to study all of his rights in order to understand in detail all the intricacies of this procedure. To do this, you need to study special documents that stipulate laws regulating refinancing. This is stated in the following laws:

1. About banks and banking activities.
2. About the Central Bank of the Russian Federation.
3. About consumer loans.
4. About mortgages.

There is also a separate federal law regulating the refinancing procedure - Federal Law No. 230 dated July 3, 2016. This law specifies in detail all methods of interaction between banking and other credit institutions and their clients. One of these methods is loan refinancing.

Conditions for refinancing

When drawing up a loan refinancing agreement, the client is subject to basically the same requirements as when receiving a consumer loan. So the client receiving a loan must have an official job with a certain length of service, a stable source of income and a good credit history. Based on the listed factors, the bank will be able to assess the borrower’s solvency and, in accordance with the results obtained, will offer him certain terms of cooperation. If the client turns out to be insolvent or unreliable, then, most likely, he will simply be refused services.

As for certain conditions for on-lending, almost all banking organizations have significant differences in them. Moreover, each individual bank may have different conditions for different categories of clients. If you want to get the most favorable lending conditions, then you will have to collect the necessary information from various banks, compare it and draw the appropriate conclusions.

Banks also have some similarities. Most credit institutions offer the following types of refinancing:

• a new loan is issued only for the purpose of repaying the principal amount of the remaining debt - the client will have to pay the accumulated interest and other payments independently;
• a loan is issued to fully repay a debt - interest and any other payments are repaid;
• the money issued under the new loan exceeds the amount necessary to repay the debts - after repaying the debt, the client will have free funds.

How does the loan refinancing procedure work?

The scheme for obtaining refinancing may have some nuances in different banking organizations. To obtain complete information about how this process occurs, it is recommended to contact bank employees. However, in general, the refinancing procedure does not differ much between different banks.

The standard procedure for obtaining this service is as follows:

1. First you need to collect all the documents that will be needed for registration. You can read below about what documents you will need to take.
2. As soon as you collect the required package of documents, go to the nearest bank branch that was chosen for cooperation. If you don’t know where the nearest branch of the desired organization is located, you can get this information on their official website.
3. After this, submit the collected documents to the bank employee for review. If your solvency is confirmed, then you can proceed to the next stage. Otherwise, submit documents to another organization.
4. Once you find a bank that will approve you to refinance, you need to notify your lender that you intend to pay off your debt early.
5. Next, all that remains is to sign an agreement with the new lender. After this, the bank will independently pay off your debt.

Required documents

To go through the refinancing procedure, the client will need to collect a certain package of documents. These documents are necessary for the bank to determine the solvency of the borrower. Depending on the chosen banking organization, the list of required documents may vary. Each bank independently sets the rules for processing such a transaction. Basically, the following documents are required:

• identification document (passport);
• certificate of stable income (2-NDFL);
• a loan agreement for an existing loan (copies of the payment schedule and a certificate from the previous lender notifying about the quality of loan servicing and the current amount of debt will also be needed);
• real estate documents (useful if the mortgage loan is being refinanced).

Advantages and disadvantages

Like any banking product, loan debt refinancing has its advantages and disadvantages. However, in most cases, the advantages significantly outweigh the disadvantages of this banking service. This is why refinancing is very popular.

Main advantages:

1. Reducing the monthly payment amount. Many clients, when they take out a loan, think that they can easily repay it within a short period of time. However, later it turns out that the loan payment hits their pockets hard. In this case, you can apply for a refinancing and reduce the monthly payment by increasing the repayment period by several years.
2. Change of currency. Considering the latest events that are happening with the ruble exchange rate, the issue of changing the currency for making payments has become especially relevant. Therefore, if you need to repay your debt in another currency, you can easily change it through refinancing.
3. Converting multiple loans into one. Paying off several loans at once is extremely inconvenient, especially if they were taken out from different banks. It's much easier to combine them into one. And this can be done through the refinancing procedure.
4. Reduced loan rates. Every year, interest rates on loans change in different directions. Lately the rate has only been falling. If you took out a loan at a higher interest rate than is currently offered, then it would be advisable to reduce the interest rate by refinancing.
5. Removal of collateral. If you purchased real estate with a mortgage or a car with a car loan, all this property will be pledged to the bank. If you want to sell your property, you must first remove it from collateral. This can be done through debt refinancing. The fact is that after this procedure, the property that was previously pledged will become your property, as a regular consumer loan will be issued.

Main disadvantages:

1. Increase in the amount of overpayment. If you are refinancing to reduce your monthly payment by increasing the repayment term, your total overpayment will increase significantly. After all, interest accrues on the loan annually. If you increase the loan term, you will accrue much more interest on the debt.
2. Additional expenses. Banks often impose a moratorium on early loan repayments. In this case, when applying for refinancing, the borrower will be forced to pay an additional commission set by the bank. Given this fact, the amount of the commission may exceed the benefit you will receive by reducing the interest rate.
3. Strict requirements for the client. A borrower may be denied refinancing even if there are minor delays on his or her loan. The strict requirements imposed by the bank can be explained by the fact that the lender does not want to risk his money and give it to unreliable clients.

What's the catch with refinancing a loan? Despite the disadvantages, refinancing loans is still an extremely beneficial solution for some people. However, before applying for refinancing, it is recommended to carefully consider your decision and weigh all the pros and cons that can be obtained from this procedure.

Applying for loan refinancing is a rather complicated process. This matter must be approached with the utmost seriousness. To make this procedure useful and easier for you, follow these recommendations:

1. If your loan provides for annuity payments (first you need to pay interest, and then only the debt), then it makes no sense to refinance the loan agreement. Due to this, you will only increase the amount of overpayments. You can see this for yourself by using a special loan calculator.
2. Before registration, calculate what benefits you will receive from this operation. Situations often occur when the benefit received for reducing the interest rate was offset by the costs of processing all the necessary documents and paying various commissions.

Based on the material presented in this article, we can conclude that refinancing is indeed a useful banking product in some cases. However, this matter must be approached with all seriousness. Otherwise, you may incur additional losses.

Video on the topic

However, there are several important nuances in the procedure itself. We must not forget that the legislation imposes requirements not only on borrowers, but also on the housing itself. Conditions for obtaining a preferential mortgage Preferential mortgage is an innovation that is still incomprehensible to many Russians. The bill was developed only in 2017. And you can take advantage of the bonuses received from the state now. True, they are available only if a number of important conditions are met:

1. the birth of the 2nd or 3rd child in the family no earlier than 2018 (that is, large families with three children born before this period do not fall under this program);
2. purchasing an apartment on the primary market (that is, purchasing real estate on the secondary market also makes it impossible to reduce the mortgage rate);
3. The loan amount does not exceed 3 million.

Mortgage loan refinancing law in 2018: new conditions

The procedure for refinancing a mortgage loan at a bank in 2018

Stages of processing refinancing To carry out the refinancing procedure, the client must write an application to a specific bank and attach a package of documents. After which the bank approves or rejects the payer’s application. If the decision is positive, then the terms and conditions of a new contract are established (in accordance with the provisions of Chapter 2 of Federal Law No. 102).

The payor must then notify his or her first lender that the loan has been granted. After which he can transfer money to repay the previous loan. Here you can download a sample application for refinancing a mortgage loan.
The last stage is the registration of the mortgage agreement with government authorities (in accordance with Article 10 of Federal Law No. 102).

Mortgage refinancing

What regulations are regulated? Mortgage lending is controlled by laws, the violation of which is unacceptable. Today in Russia there is no law on refinancing a mortgage loan, but information about this is in two Federal laws. We are talking about the Law “On Mortgage” dated July 16, 1998 No. 102-FZ and the Law “On State Registration of Rights to Real Estate and Transactions with It” dated July 21, 1997 No. 122-FZ.

Civil Code of the Russian Federation No. 51-FZ of November 30, 1994 (Chapter 42 in particular) is considered the main law that controls the entire lending process in Russia. It is followed by many lenders and borrowers as well. Banking institutions are also required to follow articles of laws such as the Federal Law “On Banks and Banking Activities” dated December 2, 1990 N 395-1-FZ.

Also Federal Law “On the Central Bank of the Russian Federation” dated July 10, 2002 N 86-FZ.

Mortgage refinancing

Info

It is enough to meet the standard requirements of the borrower. Regardless of which financial institution the borrower has decided to contact for the purpose of refinancing, it is necessary to have a complete package of mandatory documentation. Additionally, you should pay attention to the need to draw up an insurance contract. If this rule is ignored, borrowers will be set the highest possible interest rate.

TOP 5 profitable options in St. Petersburg (table) Initially, it is necessary to pay attention to the fact that the same banking institution may establish different refinancing conditions, depending on the territorial affiliation of potential clients. For example, at RaiffeisenBank, for residents of Voronezh the maximum loan size can be 2 million rubles, and for the capital - 3.5 million.

How to refinance a mortgage at 6 percent per annum?

It is very extensive and includes:

• internal passport of the Russian Federation + copies of all completed pages;
• an application drawn up in accordance with all the rules of Russian legislation and internal banking requirements;
• military ID - if the borrower is men under the age of 27;
• SNILS;
• documentary evidence of the availability of the required level of monthly income in order to make timely monthly payments;
• a certificate regarding the size of the balance of debt obligations and the absence of delays under the previous loan agreement, or a document that provides an opportunity to form an idea of ​​​​the quality of debt repayment.

The financial institution reserves the right to require additional documentation. If they are refused, the application may be instantly rejected.

About mortgage refinancing

In addition to your passport, you will need to present:

• income certificate (2-NDFL);
• paper confirming the official employment of the borrower;
• SNILS;
• original or photocopy of the work book;
• documents for real estate that serves as collateral;
• papers with details of the current loan.

In addition to the correct execution of all the above documents, it is necessary to correctly fill out an application for an on-lending loan from a particular bank. Sample application Filling out an application for a mortgage loan refinancing is considered an important point. This can be done online or directly at a branch of a specific banking institution.

Mortgage loan One of the types of lending, the main purpose of which is to obtain a cash loan, which is intended for the purchase of real estate. Banks usually offer a large number of different mortgage programs. This could be a program for purchasing a new home, or a program for purchasing secondary real estate.
Interest rates, amounts and terms are set depending on the loan product Bank A financial institution that carries out various monetary transactions. The services of a banking organization can be used by both the government and citizens of the state. Possibility of transaction For the transaction to take place, it is necessary to strictly fulfill all the requirements of the banking organization, as well as adhere to the rules of the loan agreement.

Refusal to refinance a mortgage

Benefits Refinancing has several benefits for regular payers:

1. The client searches for a loan on comfortable terms and repays the existing loan by obtaining a new loan from the same company or another bank.
2. Possibility to get a loan deferment.
3. When refinancing, the client can choose a more convenient way to pay off regular payments.
4. You can also change other terms of the loan agreement.
5. Refinancing allows you to pay off your loan early without any penalties.
6. The insurance contract is concluded on favorable terms.

Mortgage refinancing The features of this procedure may differ slightly depending on the chosen banking organization.

Refinancing of mortgage loans: realities of the day (chirkova n.s., druzhkova l.a.)

Refinancing a mortgage loan involves a sequence of certain actions, as a result of which the refinancing transaction can be considered successful. Often it all depends on the borrower himself. Today, such a financial procedure as refinancing is available in many Russian banks. It is often used by borrowers who have several loans from different banks.

Refinancing allows you to combine all loans into one. As for mortgage lending, it can also be refinanced. Often the terms of such a loan become unfavorable, and refinancing allows you to make them so again.
What you need to know It is not necessary to professionally understand all the credit and financial nuances. This is the responsibility of bank employees and lenders. But it still doesn’t hurt to know the meaning of some basic terms and concepts.

Loan refinancing, like restructuring, is a tool with which a borrower can solve his financial problems and ensure normal repayment of an existing loan. Often, these definitions are mixed, however, this is wrong. If it involves making changes to an existing loan agreement, then when refinancing a completely new agreement is concluded with the borrower. Moreover, such an agreement can be drawn up both in the bank in which the borrower already has a loan, and in another, which is naturally impossible during restructuring.

In addition, credit institutions do not agree to debt restructuring if its purpose is to obtain financial benefit for the borrower. The reasons for refinancing may be the difficult financial situation of the borrower (as well as during restructuring), and the desire of the latter to receive material benefits from this procedure. Let's consider the conceptrefinancing in details.

Refinancing concept. Refinancing cases

Refinancing implies getting a new loan , in order to pay off the old one. The law provides for the possibility of refinancing both in your own bank (in the bank where the original loan was taken) and in another. However, one point should be taken into account here: refinancing is carried out by the borrower in order to repay an existing loan, and such repayment, naturally, will be early. At the same time, you need to make sure that the existing loan agreement allows for early repayment, and that the fees for early repayment are not too high - that is, you should weigh whether it will bringrefinancingactual benefit to the borrower? Also, taking into account the costs of re-preparation of documents is of paramount importance.

The meaning of refinancing will have when a new loan agreement will be concluded on more favorable terms(with a lower interest rate: ideally, the difference in interest rates, to obtain real benefits, should be at least 2-3%) than the old loan agreement and if the repayment of the old debt occurs with minimal losses for the borrower.

As already stated above,refinancingcan be carried out either in the same bank where the borrower already has a loan, or in another bank. At the same time, the reasons prompting the borrower to take out a new loan from another bank will not be of particular interest to the credit institution. But in order for the old bank to issue a new one, good reasons must be given. Typically, the bank in which the borrower already has a loan will issue him another loan only if it considers the reasons given to be significant: in case of a difficult financial situation of the debtor (this fact will require documentary confirmation with relevant certificates), in the case of divorce proceedings and division of property, when registering inheritance of property, etc.

In a word, a bank that has already provided the borrower with one loan may meet the latter halfway and provide another loan, or maybe not, especially if the purpose of the new loan is to conclude an agreement on more favorable terms for the borrower - in this case, the bank may consider this procedure unprofitable for itself. As a rule, if the loan size is large, the bank will not want to lose such a client and will issue a refinancing. But, nevertheless, in a number of banks refinancing is not formalized for their borrowers in principle, since in any case it is unprofitable for the bank. You should be prepared for such a turn of events - in this case, the only option is to apply for a loan from another bank.

Refinancing procedure. Peculiarities

Refinancing procedure, as a rule, is similar to the usual procedure for obtaining a loan - in both cases, the transaction is formalized by concluding a loan agreement. The borrower is required following documents:

- application for a loan
-copy of the borrower’s and co-borrowers’ passports
- certificate of income, documents confirming the financial condition and employment of the borrower/co-borrower
-loan agreement and document on loan repayment history
-certificate of state registration of ownership of housing, extract from the Unified State Register of Real Estate
- a certificate from the current creditor about the balance of debt under the loan agreement.
Based on these documents, the bank will decide onrefinancing.

However, when refinancing a mortgage loan Certain nuances should be taken into account:

- in the case of refinancing in a bank other than the one in which the mortgage loan was issued, you should immediately find out whether it is possible to first obtain money to repay the first loan, and then register the pledge of the same real estate in a new bank
-Is it possible to repay the first loan early (a number of banks have prohibitions on early loan repayment - from 3 to 12 months)
-refinancing mortgage loans for purchase, especially mortgages in a house under construction, is particularly difficult
-difficulties during refinancing may arise if minor children are registered in the apartment, and the borrower does not own any other real estate.

Also, you should know that when registeringnew mortgage loan the following points may occur:

- the requirements for real estate insurance may not match - in this case you will have to take out new insurance
-it is necessary to re-evaluate the property - the issuance of a new loan and its amount will depend on this. Because the price of real estate is constantly growing, withrefinancingin a number of banks you can get a larger loan amount than the existing loan amount, based on the increased cost of the apartment
-until the new loan agreement is secured by real estate collateral (there is no re-registration of the collateral to a new bank), the bank sets a higher interest rate due to the fact that it bears increased risks, however, this rate is usually not higher than the current rate on the refinanced loan
- the term of the new loan depends on the type of product - an apartment on the secondary market or in a new building, and when refinancing non-targeted loans secured by an existing apartment - on the quality characteristics of the apartment. Depending on this factor, the term of the new loan agreement can be either increased or decreased.

Refinancing allows you to repay an existing loan with a new one that is more favorable in terms of interest rates, terms or amount of credit or loan. However, it should be understood that this process has both its pros and cons, so you should resort to it only after carefully calculating all future costs and benefits.

Legal assistance to debtors

For various reasons, circumstances may arise in which timely payment of monthly loan payments becomes impossible. Since delays spoil the credit history, borrowers begin to look for ways out of the difficult situation. When it is impossible to borrow money to repay a loan from relatives or friends, timely refinancing of the loan can help out. What is this procedure and why is it necessary? What documents do I need to prepare and which bank should I contact? We will tell you what nuances you should pay attention to in the presented material.

Why refinance a loan?

Refinancing of loans is the provision of a new amount of money on more favorable terms in order to repay previous debts to banks. It is necessary to carry out this procedure in the case when a small amount is not enough to pay off monthly payments, and a lower interest rate on the loan can save the situation. In addition, refinancing is a good opportunity to combine several loans taken from different banks and/or microfinance organizations into one loan, which will be easier to repay due to changing conditions and a new schedule.

Note! Under the refinancing procedure, you can repay the loan in full or in part - both in terms of the principal debt and in terms of accrued interest. The terms of implementation must be clarified with a specific bank.

There is a separate law on loan refinancing - Federal Law dated July 3, 2016 No. 230-FZ ( Further- Law No. 230-FZ). It describes ways of interaction between banking and microfinance organizations with debtors. One such method is loan refinancing (or debt restructuring).

How to get a loan to refinance other loans?

A loan for refinancing can be obtained either from the lending bank or from another institution. Conditions in other banks for individuals vary, so before carrying out the procedure, you must carefully read the requirements for the borrower, as well as the interest rates on the new loan. Applying for a new loan as part of refinancing is no different from the standard process: a potential borrower is required to provide a package of documents, the bank checks his solvency and credit history, and then decides whether to issue a loan for refinancing or to refuse such a loan.

Required documents

An exact list of documents required to obtain a refinancing loan should be obtained from the bank you plan to apply to. Conventionally, they can be divided into three main groups. These are papers containing information about:

• the borrower and his guarantor (if necessary): a copy of the passport, a certificate of income, family composition, etc.;
• an existing loan: a copy of the loan agreement, payment schedule, certificate from the bank on the amount of debt and frequency of payments (overdue), as well as the account details of the person applying for the loan;
• real estate acting as collateral (if necessary or when refinancing a mortgage debt).

Note! A package of necessary documents is attached to the application for a loan for debt refinancing submitted to the bank. If the bank's decision is positive, a loan agreement is signed, which is the basis for calculating payments on the new loan.

Terms of loan refinancing service

The terms of the service provided to pay off existing debt vary depending on the bank. Only one thing remains unchanged: the amount of the new loan is not issued to the borrower and is not transferred to his personal account. It is sent by the new bank in its entirety and directly to the account of another credit institution from which the previous loan was taken. Payments are made by the borrower in stages, according to the payment schedule established in the loan agreement.

If the amount of the new loan is greater than the amount of the debt, the borrower has the right to use the difference at his own discretion.

In order for refinancing a loan debt to be profitable, it is necessary to compare the costs of obtaining a new loan with the savings from a lower interest rate. It is also worth asking the bank where the original loan was taken out whether there are any penalties for early repayment of debt. If the difference in loan rates is less than two percent, then it is not recommended to carry out the refinancing procedure, since it will not be profitable for the borrower.

Note! As a rule, interest rates for refinancing a loan from another bank are higher, so initially ask your institution if it has this program for its own loans. Perhaps the terms of such refinancing will be more favorable for you.

If the loan is secured with collateral, the collateral is re-registered to a new bank. The interest rate for the period of such re-registration will be lower, since there are increased risks until the collateral is re-registered to a new lender.

Which banks provide refinancing?

Many banks offer offers for refinancing loans and credit cards. Sberbank offers refinancing for consumer, car loans, credit and debit cards with an allowed overdraft. The amount is up to three million rubles, and the rate varies from 12.9 to 13.9% depending on the loan term. The maximum repayment period is up to five years. It is possible to combine up to five loans taken from different institutions into one.

Other large banks in the country - Alfabank, VTB 24, Tinkoff Bank, etc. offer similar refinancing programs. Before giving preference to any of them, it makes sense to compare offers, for which it is recommended to create a table containing all significant conditions. A thorough and scrupulous analysis can take a lot of your time, so turning to specialists for help will be the best solution. Our lawyers will help you compare offers from different banks and choose the best conditions for debt refinancing. They will prepare all the necessary documents and independently send them to the bank for registration. Thanks to our help, you will not make mistakes, receive a loan to refinance your debt in a timely manner, and will not spoil your credit history.

ATTENTION! Due to recent changes in legislation, the information in this article may be out of date! Our lawyer will advise you free of charge - write in the form below.

Questions for lawyers

How can I find out if the bank has lowered car loan rates and is it possible to refinance?

I'm interested in whether they lowered the interest rate on a car loan at Aimanibank. Is it possible to refinance?

Lawyers' answers

Protasyuk Dmitry

Good evening, Andrey. It does not matter significantly whether the offered loan rate has decreased; you will have the rate agreed upon in this agreement for the entire duration of the contract. Refinancing, as an institution for improving the financial condition of the borrower, has become a fairly common practice among banks, however, this is not a panacea, and in each case the bank decides individually whether to restructure or not, to refinance the loan or not. Submit a free-form application to the bank with a request to restructure your loan, justify why you need restructuring/refinancing. If this bank does not cooperate, contact another bank for refinancing, maybe it will work out. You do not have the right to demand a rate reduction and/or refinance the loan; this is the good will of the bank.

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