Refinance of the existing loan
In 2008, the refinancing of the loan was a very unique bank product, but today it forms part of the portfolio of each bank. At a time when there was not enough new loans, the banks started to fight for every client who is repaying their loan properly. The market has provided space and the interest of clients forces banks to adjust the conditions of refinancing loans in favor of the client. Thanks to the bank’s obligation to inform the client of the new proposed interest rate for the period following two months prior to the start of the new fixation period fixed by law, each client is entitled, in the event that he or she does not agree with the proposed rate, to request for repayment of the entire loan balance on the fixation anniversary with a loan from another bank free of charge. Yes, free of charge, the law has allowed for finding favorable financing and a bank that best meet the client’s requirements for the next period. Those who managed to arrange a property-secured loan in the past can be afraid of the lengthy loan arrangement process and changing the bank. So let’s look into it together and try to disprove the myth that it is complicated and expensive:
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Since each bank wants the client to fulfill their obligations properly and on time, the first criterion for a successful refinancing loan is that the loan we are going to repay is properly paid on time. If the client is not completely sure if they have any missed payments, we can check their payments in the loan register.
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Confirmation of income: if the loan is repaid properly and on time, most banks can provide a new loan without the confirmation of income at favorable rates. As there is no need to document the income, the process takes less time and there is no need to submit a lot of documents on current earnings. (Even self-employed people and entrepreneurs with optimized tax returns have a chance :-)
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Not every refinancing loan requires a new expert report (for example, ČSOB acquires a free real estate valuation for the refinancing loan) and several banks also accept original expert reports. Therefore, the client does not need to invest time and money in getting a new report.
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Banks provide the processing of new refinancing loans free of charge. So there is no charge in the old bank on the fixation anniversary, and no charge in the new bank for a new refinancing loan.
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Refinancing always pays off if you find a bank with a lower interest rate, the interest is charged only on the loan balance, and the lower rate means a lower monthly installment and a reduction in the total overpayment. So another plus is paying less on interest :-)
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With a refinancing loan, the client can set a maturity period to adjust the installments according to their current situation.
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With a refinancing loan, there is also the possibility to raise the loan and get money for the reconstruction of housing or, in many banks, to get money that can be used for anything without proof of purpose.
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It is also possible to repay a liability with another loan, for example, a consumer loan, or a depleted credit card, and thus reduce the monthly installments in a family.
I know we have just begun to look into this complex topic, but let us check your loan for free on your fixation anniversary. You tell us your ideas and we will look for a solution :-).
Martina Štefanovičová, 28.01.2014
Mortgage Specialist
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