What is Re-financing in Housing Loan?
Re-financing, also known as housing loan structuring process; a mortgage that has been withdrawn on time by a person and is continuing to be repaid, is revised due to changing market conditions and more advantageous loans. Although the concept of re-financing is a term that applies to house loans, it is a process that many people prefer to apply.
How to Re-Financing?
Within the scope of re-financing applications, if the same credit that the consumer has taken on time is arranged at more appropriate interest rates, then the consumer should apply to the bank organization to close the loan. After the application process, re-financing process is performed for the customer who should apply for the loan application for new loan selection. This situation, which is not preferred by the bank institutions, creates a great advantage for the customers, while the institution has to perform two transactions at the same time.
Early Closing Fee
Within the scope of re-financing applications, the bank that wishes to have this transaction re-evaluates the remaining debt for the customer. If the customer’s debts are more than 36 months, 2%, and if less than 36 months 1% file expenses are paid to the consumer. Bank institutions foresee the fact that many people cover these expenses in line with the re-financing transactions. Compensation amount given in line with the early payment transaction, not to exceed the total discount amount made on behalf of the consumer is applied by the bank institutions.
Almost all banks established institutions in line with banking services in Turkey performs the re-financing process. However, the situation that separates the institutions from each other is that they operate different interest rates in line with the early settlement fee. It will be healthier to prefer these banks as the early closing fees, which are counted in line with the re-financing fees, are deducted from the consumer. Bank institutions prefer to meet one-on-one with the customer for the re-financing transaction.
What should be considered while re-financing?
There are some financial situations that bank customers will need to pay attention to. Among these issues, while making profit on credit interest rates comes to the forefront, in order to perform the re-financing transaction, the bank customer should calculate the profit-loss ratio well. The customer who withdraws his / her previous loan at 1.60% and will re-finance by closing the loan and withdrawing a new loan must have lower rates. Differences of 15-20 points will not result in any gains to the customer, but will also open the door for many additional expenses, such as file costs. For this reason, the fact that the new loan will be issued at a rate of 1.40% does not provide any profit to the customer.
If the customer wishes to make a profit in order to carry out the re-financing transaction, he / she should make sure that there is a difference of approximately 35-40 points between the previously withdrawn and the new loan. Since the Bank places all the expenses incurred in this transaction to the consumer, credit options with low interest rates but high file costs should also be avoided. It will be healthier to decide after discussing with a few alternative banks.
In line with the re-financing applications provided by the bank institutions, it is possible to perform the calculation process without going to the bank through various web platforms. After obtaining the maturity period and interest rate of the loan that was taken in the past from the bank institution, you enter the information of your new loan through calculation sites and your profit-loss situation occurs in the refinancing transaction.
Interest rate, remaining maturity, monthly installment and a total repayment of the customer will be displayed on the screen of the current credit and the new credit should be displayed. As a result of the calculation process through automatic calculation tools, it is revealed whether the consumer can make a profit through the refinancing transaction. Although this transaction is not preferred by bank institutions, it is known as a financial support transaction that these institutions have to perform in order to avoid losing customers.