The term «refinancing» is increasingly appearing on the pages of business and financial publications. This is one of the services offered by financial institutions in Russia today. With the help of refinancing, you can significantly save on paying interest on a loan by reducing the amount of the monthly payment or the loan term and renegotiate the current mortgage agreement on more favorable terms. At the same time, many Russians do not know about the existence of refinancing, nor about what functions it performs.
For more information on how to correctly use this financial instrument, Aleksey Okhorzin, head of the retail business block of the MKB, spoke.
In fact, the refinancing service is a new loan on more favorable terms. This is a financial program that provides a client with a loan to repay existing loans at one or more third-party banks at once.
Several advantages of refinancing stand out. This is an opportunity to combine several loans into one, reduce the interest rate on the debt, reduce the monthly payment and, if necessary, obtain additional loan funds for personal purposes.
Today, mortgage loans can be refinanced, auto loans, credit cards and personal loans.
It is worth noting that the term of the loan does not matter here — you can refinance both a completely fresh loan that was taken a few months ago, and a loan that you have been paying for several years.
You can think about refinancing if today the bank offers a rate lower than at the time when the loan was issued. In addition, the option will help if a person has taken several loans from different banks with different amounts and payment dates, or in case of a decrease in income. Refinancing can also help if the client plans to sell an apartment or a car that is pledged to a credit institution.
It is more convenient to pay once in one place, and not think that on the 5th you need to throw money at credit card, on the 12th — to pay the mortgage, and on the 26th of the rest of the salary to send also to a consumer loan. Moreover, by refinancing these three loans into one, most likely, the total amount of the monthly payment will decrease, and it will become easier to pay off the debt.
Refinancing does not affect credit history. It is much more important in this regard to service the loan on time. Timely payment without delay, on the contrary, can even improve the client's credit history.
There is another subtle point with insurance — it is really needed, but only for secured loans with legally required insurance: this is a mortgage or a car loan. For other loans, insurance is voluntary. It should be noted that the insurance concluded with the previous bank expires after the conclusion of a new contract.