With the new interest decreases, there has been a great increase in applications made to banks for restructuring or credit transfer (refinancing). Especially in the past few years, people who have received high rates of credit compared to the present day have been on the way of banks for restructuring.
Refinancing has always been a system in favor of borrowers. The consumer, who is not affected when the interest rates increase in fixed interest loans, can benefit from the decreasing rates with the restructuring opportunities when the interest rates decrease. However, in order to get maximum benefit from refinancing, it is necessary to be aware of some tricks.
Make more profit by lowering your maturity, not monthly installment
The longer the maturity of the loan, the higher the interest paid to the bank over the principal. When the maturity is shortened, monthly installments will increase. Therefore, it is necessary to keep a balance in loan monthly installments. The monthly installment amount should be low enough for you to pay, but high enough not to cause you any extra damage. Refinancing gives the person a chance to restore this balance. How Does?
Interest is paid to the bank as long as the principal of the purchased loan remains as a debt. When maturities extend, the interest paid also increases, and the cost of the loan increases. Therefore, while restructuring a loan, if the monthly installment amounts are not decreased and the total number of installments decreases, the total cost of the loan decreases more.
Is it a restructuring at my own bank or a credit transfer to another bank?
You can apply to your own bank to restructure your loan or transfer to another bank. However, when transferring the loan to another bank, a 2% early closing penalty is paid over the principal remaining to the previous bank. Combined with new file costs, expertise and mortgage fees, switching to a new bank will bring you a significant down payment. Your current bank usually gives higher interest rates than other banks. Sometimes there will be differences of up to 0.15% between your old bank and the rates offered by new banks.
In these cases, all additional costs (2% early payment penalty, new file cost, new mortgage fee, etc.) in the transition to the new bank should be added to the interest to be paid to the bank according to the bank’s offer and should be compared to the cost of the refinancing offer of the existing bank. In such cases, it is often a more economical option to switch to a new bank.
Reduce your cost further by using custom payment plans
Another advantage of refinancing is that you will be able to redefine your payment plan as your old loan will be closed and a new loan will be opened. Let’s say you used your loan in fixed installments. However, you changed your job in the meantime and now you receive bulk money at certain times of the year. In this case, while refinancing, you can add interim payments to your new loan and further reduce your total cost. If you want to make interim payments in the future, you will not pay an early payment penalty.
You can also take advantage of increasing or decreasing payment plans with the new payment plan. Let’s say your children are growing and your expenses will increase. After 3 years, you will not be able to repay the loans as much as they used to. In this case, you will not close your credit and get stuck with the installments that are decreasing with the decreasing payment plan. Or, for example, you expect to be promoted after 3 years and earn more money than now. This time, you can use the increasing payment plan to reflect your income increase to your credit installment.
You have learned the tricks about loan structuring. Now it’s time to do your housing loan calculation and find the best refinancing offers. Now you can easily do this online. You can immediately go to page and calculate your profit and loss situation in refinement, reach the best bank offers and apply for refinement instantly.