The mortgage is one of the longest commitments that the average person will incur in life. Currently, it is granted for up to 35, which means that by the time the last installment is repaid, many borrowers will be scratching their retirement. For 35, 25 or even 10 years there can be many turbulences on the financial market that will make loans more or less profitable.
After some time, it may turn out that our loan concluded a long time ago ceased to be competitive, on the contrary – much better offers are widely available. We can then feel the anger and frustration that we pay more than we could at current rates. Refinancing loans are a solution that can overcome this problem. But what are they and is it really worth taking them on?
Refinancing loan what is it?
A refinancing loan is one of the less known types of loans. Everyone has heard about mortgage, cash or consolidation loans, but for some, refinancing remains a mystery. You can compare it to transfer a mobile number from one network to another – we use it to transfer from one bank to another, which offers us better conditions for repayment of the loan.
The refinancing loan should not be confused with the consolidation one, as there is no consolidation of several liabilities here. Simply with the help of a new (refinancing) loan, we pay off the old one, the conditions of which no longer satisfy us.
What to look for when refinancing?
First of all, we should carefully analyze such elements of each offer as interest rate, bank’s margin or additional commissions and fees. We can save the most on refinancing loans just on the margin.
As a consequence, although we will repay the same amount in theory, in practice our monthly installment should be lower. We will give our wallet a little breath and make sure that we do not overpay on our loan.
Comparing all these parameters can be a challenge for a layman, so you can think about using a credit advisor. In this way, we will be sure that the new loan will be more attractive to us.
Is it worth taking a refinancing loan?
If it’s been a while since you made the commitment and you can see with a naked eye that the financial services market has changed and you are paying more than we should, it’s definitely worth thinking about a refinancing loan. Why overpay if there is another solution? Thanks to a properly matched refinancing loan we can save potentially really large sums.
This is not an option only for heavily indebted persons who are unable to pay the current installment. Even if we have a stable financial situation, we can always improve it in this way.
Refinancing loans are still a pretty niche solution, and for many they can be a great solution. It’s worth learning a little more about them.