When you buy a loan, you do it at the interest rate in effect at the time of signing. But the long-term interest rate is constantly fluctuating. It is very likely that you would now get a much better interest rate and term refi than you had a decade ago. Fortunately, you must not stop at this conclusion. You can renegotiate or refinance your loan, which will allow you to benefit from current interest rates, more advantageous. There are of course a number of conditions that we will detail below.
What are the conditions? Refinancing a loan is only worthwhile if the difference between your current rate and the renegotiated rate is significant enough. Refinancing generates a number of costs. Here is the list below:
Three months’ reemployment allowance (three months interest on the amount reimbursed).
Notary fees: only when you take out a new mortgage with another lender.
The revision of the outstanding balance insurance, home insurance, current account insurance … associated with it can also lead to additional costs.
Attention: it is possible that another bank offers more advantageous conditions, but the costs will also be higher than in case of internal revision of the loan. It is generally considered that you have to obtain a lower interest rate and term refi of at least 1% that a change of bank is interesting!
A simulation will allow you to see more clearly
The value of renegotiating your loan depends greatly on your personal mortgage situation. Do you have a fixed or variable rate? How many years of credit do you have left? How much did you borrow? All these factors are important. The best way to evaluate your advantage is therefore to perform an objective simulation, like that of Guide-Epargne.be. The simulator takes into account the differences in rates, but also the fees that the new mortgage generates.
Would you like to know more about the consequences of renegotiating your loan on your outstanding balance insurance or are you looking for the most advantageous formula? Do not hesitate to contact us. We are at your service!
REFINANCING BEFORE THE END OF THE TERM
Your term ends in 2 years (or other terms) and you check the rate market regularly. You realize that there is a considerable difference between your contract rate and the one that is currently trading. Know that it can be advantageous to break your contract and renegotiate with us a new mortgage.
But before contacting us, the actions you need to take are:
- Have a copy of your mortgage statement for the current balance, payment, rate and term refi and term,
- Request the penalty for breach of contract,
- Contact us when you have everything in hand, which will give you an opinion independent of that of your branch or virtual advisor.
You may be surprised at the savings you could make. We will advise you on the best choice and will tell you if it’s advantageous.
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