Why refinance your credit?
Credit refinancing involves replacing one’s current loan with another loan at a much more advantageous rate. In many cases, the new credit is contracted at another bank. The advantage of a credit refinancing lies in the fact that the total amount to be repaid is lower than the previous credit.
A lower rate is granted, which makes it possible to reduce the monthly payments. Since 2015, more than 200,000 credit refinancings have been registered in Belgium.
There are two ways to redeem credit: either ask your bank or ask another bank. Although it is not obliged, your bank will surely accept your request. By refusing, she takes the risk of losing you as a customer, which explains why it is very rare that a refusal is granted.
However, the new rate of your loan will not fall accordingly compared to the old one. The bank naturally takes into account its shortfall.
If your bank has refused to refinance your credit or the proposed rate does not suit you, you can naturally turn to another financial institution. It will offer a rate more interesting than your home bank.
It should also be known that the rate defined depends a lot on the personal situation of the customer. Equity, repayment capacity, amount borrowed against the purchase amount and other factors will influence the determination of the rate.
Attention to additional costs!
Although credit refinancing is advantageous, it is important to pay attention to the various costs generated by such an approach. In fact, a redundancy payment of 3 months of interest will be due to the bank to which you subscribe your new credit.
It will also be necessary to pay the release of the mortgage. The mortgage allows the bank to sell your home if, at some point, you are no longer able to repay your loan.
You must pay this mortgage with your former financial institution. Subsequently, you will have to build a new mortgage with your new bank. Of course, fees are payable when refinancing credit. These amount to a maximum of 250 $.
Refinancing credit: conclusion
By taking all this into account, sometimes the refinancing of credit is not that interesting. Be aware that staying within your bank, you will not have a raised fee or new mortgage to build. It is therefore necessary to inquire to the maximum before considering a refinancing of your credit.
Also note that a credit refinancing is only worthwhile if you still have many years left until the loan is completed. Given the current situation and the very low rates, the moment is ideal to think about the refinancing of your credit !