Features of mortgage refinancing - what you will have to pay extra money for. Disadvantages of refinancing The most favorable mortgage refinancing rates

For several years now, Russian banks have begun to offer their clients mortgage refinancing, with which they can renegotiate the terms of the loan agreement under which they purchased housing, be it an apartment or a country house.

allows borrowers to receive tangible benefits by lowering the mortgage interest rate or changing the loan term. This procedure is possible either in the same bank where the original agreement was drawn up, or it can be carried out in a new credit institution that offered more favorable mortgage conditions, but after agreement with the old bank.

In the banking sector, competition for clients with stable solvency and reliability is intensifying. New loan programs are being developed for future borrowers, attractive in their profitability. In competition for clients, banks try to get those borrowers who already have a mortgage loan and consistently pay for it. It is for this category of clients that refinancing programs are developed and offered, including for mortgage loans, giving consumers the opportunity to change the bank and the terms of the loan agreement without any significant losses.

What are the benefits of refinancing your mortgage?

Today it is quite difficult to keep up with real estate prices; the market value of collateral housing is also growing. High rates on mortgages issued several years ago reduce the financial capabilities of citizens, which does not allow them to make repairs, buy a new car, update furniture in an apartment, or start their own business. This is why refinancing is becoming an increasingly popular banking product.

1. By choosing mortgage refinancing, borrowers have the opportunity to:
2. Reduce the current interest rate on the loan.
3. Obtain additional funds by paying off your primary mortgage earlier through refinancing.

All of these benefits for the borrower make the option of refinancing existing mortgage debt very attractive.

Pitfalls of refinancing a mortgage loan

Of course, banks do not have a very favorable attitude towards “traitors” and, to the extent possible, resist refinancing their own loan programs with other banks. In addition, sometimes they even stop refinancing their own borrowers, as Sberbank did in September last year and temporarily suspended refinancing the mortgages of its clients.

The first pitfall that awaits the borrower is the need to obtain the consent of the bank that issued the original loan. If the agreement contains a clause that is possible only with the consent of the bank, then the likelihood of obtaining such consent without penalties is quite low.

The next pitfall awaiting the borrower is that you need to gain the trust of the new credit institution, document your own financial solvency and the liquidity of the refinanced collateral.

Some financial institutions require a guarantor's certificate and additional collateral - not every borrower can provide all of this.

Alternative mortgage refinancing options

In some cases, it is possible to renegotiate a mortgage agreement with a lower interest rate without using the refinancing procedure with the involvement of another financial institution. Here are some of them:

1. If you signed up without collateral, then after completing the procedure for putting the new building into operation, you can renew it to a secured contract with a reduced rate for the remaining repayment period.
2. You can take part in social programs to assist certain segments of the population in purchasing real estate, taking advantage of the subsidies and benefits provided by the state.
3. If you have a second child in your family, you have the right to sell maternity capital in accordance with clause 7 of Article 10 of the Federal Law of December 29, 2006 “On additional measures of state support for families with children” under the regulated conditions of a financial and credit institution.

Algorithm for obtaining mortgage loan refinancing

Now we will figure out what a borrower needs to do during the standard procedure for refinancing a mortgage loan; the algorithm can be divided into several stages:

Stage 1: We collect a package of documents for mortgage refinancing, which consists not only of the borrower’s papers, but also information about the loan being refinanced. To do this, you need to take an account statement, a certificate of the status and amount of debt and other necessary documents. After this, a bank is selected and an application is submitted. For some time, the bank's management has been considering an application for the possibility of providing a mortgage refinancing program.

Stage 2: We are waiting for the bank’s decision on the refinancing request– issue a mortgage loan to repay the debt on the loan issued initially, or refuse the borrower. If the application is approved, the client collects an additional package of documents related to the mortgaged property. The bank's management analyzes whether this property suits it as collateral for a mortgage or not.

Stage 3: Studying the terms of mortgage refinancing, terms and rate. A notice will also be issued to the primary lender that the mortgage will be repaid before the deadline specified in the agreement.

Stage 4: We notify the bank that originally issued the mortgage loan about the start of mortgage refinancing. The creditor’s task is to review the terms of the agreement and set a date for full settlement of existing debt obligations. In most cases, payment will be made on the next payment plan date.

Stage 5: We start the procedure for transferring funds to repay the mortgage loan, taken from the first bank after all conditions have been agreed upon. The moment of transfer of funds is specified separately - in cash or by wire transfer to a bank account. This is decided by the bank. Of course, each case is individual; the consumer has the right to contribute part of his own funds, or he can fully use the funds borrowed from the bank in order to cover all obligations on the first loan.

Stage 6: We initiate the procedure for state registration of mortgages on the transfer of rights to property in accordance with Chapter. IV and ch. VI Federal Law “On mortgage (real estate pledge)” dated May 7, 2013, number 102-FZ.

Additional costs when refinancing a mortgage loan

This procedure involves the following points:

• Extremely tedious collection of documents;
• Significant waste of time;
• Lengthy approval of documents;
• Cash costs for all procedures.

Additional costs when refinancing a mortgage loan may include:

• The rate increases by 1-2% if the borrower refuses to either insure his life or health.
• Some banks will have to spend an additional 1-2% of the loan amount to pay various fees for issuing and transferring funds under the refinancing program;
• Secondary completion of the procedure for assessing the market value of collateral real estate by independent experts. You will again have to pay for this.

Removing the encumbrance from the pledged real estate will also require cash costs, as well as for the rights under the pledge of the refinancing bank. If you decide to do the design yourself, it can take quite a lot of time. In most cases, the borrower turns for help to specialized companies, which, for money, take care of all the paperwork.

Banks for mortgage refinancing in 2019

Refinancing a mortgage in Moscow with a property value of 6,000,000 rubles with a debt balance of 3,000,000 rubles (half of the cost of housing has already been paid) and a refinancing period of 10 years.

Summarizing the above, before you go to refinance your mortgage, you need to remember the pros and cons, carefully study the options in different banks, and again calculate the size of the rate, the size of the monthly payment and the term of the final mortgage loan. Do not forget that refinancing a mortgage loan with a change in the loan currency can remove the risks of exchange rate fluctuations from you, if you initially took out a mortgage in dollars or euros.

Have you decided to refinance your existing mortgage loan? And now you are collecting information on how to do this and how profitable it is? Study the materials located in the menu of our website “Refinancing" and you will find answers to all your questions!

Mortgage refinancing is the process of obtaining a new loan to repay an existing one on more favorable terms. In this case, the collateral (real estate) becomes collateral for the new loan. It is this item that requires certain additional costs from the borrower - additional costs when refinancing a mortgage loan are simply inevitable. Let's consider when, where and for what you have to pay.

Necessary expenses for refinancing at the stage of applying to the bank

1. First of all, it is important to understand that you are a blank slate for the new lender, so you will have to re-confirm your solvency. If it’s not difficult to get a certificate in the bank’s form, everything is fine. However, there are also more complex situations that require some expenses. In addition, you will be required to provide a certificate about your existing debt and its repayment;
2. The bank also needs information about the value of the collateral. That is, it will be necessary to make an assessment. It’s good if the credit institution has an appraiser, and all you have to do is deliver him to the site. However, this is not always the case. Therefore, be prepared to pay for an appraisal from a bank-accredited appraiser;
3. Some banks also have a special fee for processing an application, which, by the way, does not guarantee its approval. Therefore, its presence or absence should be clarified;
4. And one more point - the presence of penalties for early repayment of an existing loan. If they are, you will again have to incur some additional costs.

Costs at the stage of obtaining a mortgage loan

Let’s imagine that all of the above expenses are not burdensome for the budget or are completely absent (and this happens!), and your loan is approved. However, there are some fees that cannot be avoided.

1. Commission for issuing a loan. It can be paid once (when the loan is issued) or in the form of a small monthly payment, representing a certain percentage of the loan amount. The second option is not at first glance more profitable, but in reality such an overpayment is much greater than with a one-time commission. Be sure to ask the loan officer to calculate its total cost!
2. Commission for transferring funds to the primary lender;
3. Conversion costs (if the new loan is issued in a different currency);
4. Costs associated with the execution and registration of the pledge. The cost of these procedures at first glance is small, but repeated deposits of even small amounts sometimes make the most profitable event unprofitable;
5. Payment for property and life insurance. It is good if the new lender recognizes the existing insurance as valid, but this does not happen often.

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The decline in mortgage rates has led to Russians increasingly applying for loan refinancing. Banks do not satisfy these requests. In July 2017, the average loan rate was 11%. This is a new record in the history of the Central Bank. Just two years ago, mortgages were issued at 15%. How do citizens achieve favorable lending conditions?

Essence

Refinancing is a program that allows you to pay off debt on an old loan by taking out a new loan. The service is divided into two types:

1. Internal re-issuance of a loan on new terms by drawing up an additional agreement.
2. External re-registration is obtaining a loan from another bank. In this case, the client will have to go through the contract registration procedure again. The process involves the registration of a new loan account and its security in the presence of documents confirming ownership.

Is refinancing a mortgage profitable?

It makes sense to renegotiate the contract if the size of the regular payment is reduced or the rate is reduced. For example, a client received a mortgage in the amount of $200 thousand, which he must repay in 30 years. The contract is serviced at 12% per annum. The monthly payment will be $2,057. Is it profitable to refinance a mortgage if the loan rate drops to 9%? Yes, this will save the borrower $488 monthly. Over thirty years, the savings will be $16,000.

Experts advise refinancing your mortgage if the interest rate drops by at least 2 percentage points. The average market rate on the market today is 10%. Accordingly, it is more profitable to deal with the issue of refinancing for clients who took out a mortgage in 2015. Then the average market rate was 12%. Those who purchased a home just a year ago need to wait for rates to drop to 9%.

Is it profitable to refinance a mortgage if the agreement provided for annuity payments? No, according to this payment scheme, the first payments will be used to pay off interest. If more than half the term has passed since the conclusion of the contract, then refinancing will only bring losses.

You can check whether it is profitable to apply for mortgage refinancing at VTB Bank as follows:

1. It is necessary to take the current payment repayment schedule and add up all remaining payments under the contract.
2. Next, you should enter the initial conditions into the loan calculator on the bank’s website: the term remaining under the current agreement, the calculated debt balance.
3. The calculator will calculate the monthly payment amount.
4. This amount should be multiplied by the number of months corresponding to the term of the new loan.
5. It is necessary to compare the results obtained. If the difference is significant, then refinancing will be profitable.

Advantages

As a result of refinancing, the interest rate will decrease, but the term of the agreement will be extended. Is it profitable to do? Customer reviews confirm that borrowers with a stable high income can save significant money. If you cannot renew the agreement with the bank that issued the loan, you can always contact another financial institution.

There are some positive aspects to lower rates. According to the Central Bank, as of August 1, 2017, mortgage loans were provided by 20% more than in the same period last year. The total volume of lending increased by 4.7 trillion. rubles

Preparation

To answer the question “Is refinancing a mortgage at Sberbank profitable?” in a particular case, costs should be calculated.

• first of all, you need to study the contract, pay special attention to the clause that concerns interest-free early repayment of the debt;
• Next, you need to calculate the size of the commission and adequately assess your capabilities;
• if you decide to renegotiate the contract, you should contact the creditor;
• Banks meet with responsible clients and formalize debt restructuring; it does not always provide for on-lending;
• If you are unable to achieve results with one bank, you should contact another credit institution.

Documentation

To apply for mortgage refinancing at Tinkoff Bank, you should prepare a number of documents:

• copy of passport;
• a certified copy of the work record book (agreement, contract);
• certificate of income (2-NDFL) from the place of work;
• borrower's life insurance agreement;
• the original agreement and bank statements with the debt repayment schedule.

After filling out the questionnaire, the bank begins to assess the borrower’s solvency based on his data and the loan agreement. If the application is approved, the borrower should provide documents for the property, certificates with the balance of the debt and the absence of restructuring, a letter with the details of the account from which repayment is made.

Compiling an application

As soon as the client receives the bank’s consent to reissue the contract, the process itself begins. The borrower will receive funds to repay the previous loan. The property will be transferred as collateral to the new banking institution.

The client should immediately prepare for additional costs. If the insurance company is not an accredited partner of the bank, it will have to be replaced. Otherwise, the lending rate will increase. At Sberbank, the refusal to lend to life will be compensated by an increase in the rate by 1 percentage point, at Absolut Bank even more - 4 percentage points.

If the insurance was issued when concluding an agreement with the first bank, then you will simply need to change the beneficiary in the document. Also, during the period of drawing up a new contract (until the old one is paid off), an inflated rate (1-2 p.p.) for life insurance is charged. This lasts no more than a month.

What's happening in the market?

Sberbank reduced the mortgage refinancing rate to the historical level of two hundred. You can purchase housing in a new building at 7.4-10% per annum, on the secondary market - at 9-10%. The VTB group of banks issues mortgages at 9.9-10%, and issues funds for the purchase of new housing at 9.6-10%.

Under the same conditions as in Sberbank, you can apply for mortgage refinancing at Otkritie Bank - at 10.2%. Absolut Bank and Uralsib also reduced rates to 6.5% for a limited number of new apartments.

Refinancing rates of Russian banks are presented in the table below.

One of the important conditions for refinancing is the absence of delays, penalties and fines. If there are any, then you first need to pay off the debt, and then submit an application.

Problem

Is mortgage refinancing beneficial for lending institutions? In most cases no. Against the backdrop of declining market rates, banks strive to maintain interest income, which is of great importance in an unstable system. Therefore, they refuse to change the terms of the loan. Clients are not even given formal reasons for refusal.

By law, the borrower has the right to refinance the loan if the agreement does not contain a direct prohibition on this operation. However, today banks are increasingly including this clause in the contract. This has already attracted the attention of the regulator.

Clients have only one chance to change the bank's decision. It is necessary to provide a letter of guarantee or a preliminary agreement from another credit institution, under the terms of which the bank undertakes to close the loan early and issue the borrower a new mortgage on the same terms, but at a reduced interest rate. In this case, the lender will accommodate the client halfway, since early repayment of the contract will greatly reduce his interest income. The deal will become unprofitable.

Is refinancing a mortgage profitable: disadvantages

It is almost impossible to achieve a revision of the terms of the contract if part of the debt was paid with maternity capital funds, the property is registered in the shared ownership of parents and minors. It is very difficult to implement such an object.

Revision of the terms of the agreement may affect the requirements of the Bank of Russia. According to the regulator’s standards, a financial institution must create a reserve for each loan issued. This entails freezing of funds and may affect compliance with regulations.

Is it profitable to refinance a mortgage? Not always, since you will have to pay money for the procedure for re-issuing documents. The first payments on the new loan will be used to pay off the reduced interest. And finally, the most important drawback is that the borrower will lose tax benefits. In the case of refinancing, it is no longer a mortgage, but a loan agreement secured by real estate. Therefore, borrowers are deprived of tax deductions.

When is it profitable to refinance your mortgage? Such an operation is economically justified only in one case: if the new lender’s rate is at least 2 percentage points lower than the previous one. That's why there are so many people wanting to refinance.

The mortgage refinancing service is in demand today more than ever before, and this is not surprising. The unstable exchange rate and the changing economy of our country force Russian mortgage borrowers to constantly take actions that help save money or reduce their financial burden. And there seems to be nothing wrong with this, but there is one “but” - on refinancing you can not only save, but also lose before saving as such.

Financial losses (costs) when refinancing a mortgage

Advertising signs of most banking institutions are full of announcements about refinancing and favorable conditions for this procedure. And indeed, the benefits are obvious: lower interest rates, extended mortgage payment terms, the ability to transfer a mortgage loan from one currency to another, and simply replacing one banking institution with another that is more loyal to its customers. But few banking institutions talk about what costs when refinancing a mortgage await a potential borrower during the preparation of documents and the procedure itself.

But there will definitely be expenses, regardless of which bank is carrying out the refinancing of an existing mortgage. Not only is it necessary for the mortgage to comply with the terms of refinancing, but also the documents, many of which are paid, will have to be reissued. This includes insurance, commissions, interest on transfers, valuation of collateral, and in some cases also a power of attorney. In general, there can be a lot of expenses, but let's look at individual cases in more detail.

Costs of refinancing a mortgage at VTB 24

VTB 24 is one of the few banks in which the service of issuing mortgages and, as such, refinancing are most popular, especially among ordinary people and individuals. The conditions here are favorable, and often quite low interest rates are offered, but there are a few “buts”. Firstly, they rarely refinance their own loans (mortgages), and secondly, few people talk at the bank itself about the costs that await clients. These expenses include expenses for:

• registration and collection of documents;
• new assessment of collateral;
• insurance of risks determined by the primary lending program;
• commission for issuing a loan amount;
• opening accounts;
• removal of encumbrances;
• new registration of pledge.

Agree, this is not a small list, but again, all additional costs and their list depend on the conditions of the initial mortgage lending. And of course, from the bank listed as the primary creditor.

Costs of refinancing a mortgage at Sberbank

Clients who have already refinanced their mortgage with Sberbank note that the conditions here are much more transparent and for the most part the bank takes on all expenses. The bank leaves expenses to clients for:

• transaction registration;
• assessment of collateral (real or movable property);
• conclusion of a new agreement;
• some certificates (the list depends on the primary creditor).

Expenses in DeltaCredit

As for DeltaCredit, the costs for refinancing a mortgage are slightly different, but they are not fixed either, that is, in each individual case they can be different. The list of expenses includes:

• assessment of collateral;
• bank registration services;
• notary services (if required);
• payment of government duties (usually paid by banks);
• conversion (if the mortgage is foreign currency);
• insurance premium.

That is, as you can see, all banks have their own conditions, and banks approach each individual case differently. Before you start the procedure, be sure to consult about the costs and calculate all the benefits.