Mortgage loan in another bank
Financial organizations relatively recently began to issue loans for the payment of housing loans. Even today, not every large bank provides mortgage refinancing services. Meanwhile, such loan products are in demand among Russian borrowers who want to reduce the amount of overpayment or simply change certain terms of debt repayment. However, many of them do not know all the details and peculiarities of on-lending mortgages. And refinancing a loan, especially a target one, is a rather complicated process.
Terms and requirements of banks
You can take a home loan to pay off the same target loan at any banks that provide a refinancing service. Therefore, if the original creditor has such programs, then it is best to conclude an appropriate deal with it. But it is worth noting that not all banks refinance domestic, that is, their own loans issued for the purchase of housing. Most often, financial institutions provide borrowed funds for the payment of an external mortgage issued at some other bank. The conditions under which you can refinance a housing loan are individual for each financial institution. At the same time, most of them impose standard requirements on those who want to get such a loan product. This list usually consists of the following:
- Russian citizenship;
- availability of official income, the size of which corresponds to the credit load;
- age at the time of consideration of the application for refinancing – not less than 24 years;
- age at the expiration date of the new mortgage agreement – no more than 65 years;
- the absence of outstanding debts for any cash loans;
- good credit history.
In addition to the recipient of the target loan, banks always impose certain requirements on mortgage real estate purchased with the funds of the first lender. That is, housing must comply with all the parameters specified in the program of this type of lending. In addition to standard requirements, financial institutions may also establish special ones. For example, the terms of a loan may indicate that only the mortgage loan that was issued for the purchase of a new property can be refinanced. In this case, the bank will not provide borrowed funds to repay the loan taken for the purchase of secondary housing. On top of that, the amount of current mortgage debt often has a value, as well as the term for which the previous contract was executed.
The list of documents that are usually required for processing a refinancing loan also depends on the conditions of a particular offer. In this case, the main list includes the following:
- passport of the main and all minor borrowers, as well as guarantors;
- employment contract signed with the employer and employment record;
- a copy of the first mortgage agreement;
- certificate of income that the borrower receives from sources counted by the bank;
- documents for each type of collateral – the main, additional and temporary.
Mortgage refinancing: key features
Refinancing a loan that was received for the purchase of real estate is a more complicated procedure than refinancing a non-earmarked loan. First, banks often refuse to customers the ability to repay the debt ahead of time using refinancing, because in this case they lose a significant part of the profits. In addition, borrowers face certain difficulties directly during the registration of a new housing loan. The main problem is the transfer of collateral.
Real estate purchased with borrowed funds always acts as the main security. Consequently, mortgage housing is pledged to the original lender, who in turn will remove the corresponding burden only when he receives all the money given to the borrower. Meanwhile, based on the details of the mortgage refinancing process, the debt is repaid after the conclusion of a new contract with another bank. And the second lender also needs collateral in the form of real estate, which the borrower purchased on credit. And here is the main difficulty – how to get a new mortgage and mortgage housing, if it is still subject to collateral for the current loan? To resolve this issue, there are two options.
- The borrower provides the second bank with a temporary pledge, the value of which corresponds to the amount of the loan to be processed. But if, of course, the lender agrees to such conditions. In such a situation, the financial institution and the borrower conclude, in addition to the main one, an additional contract. This document stipulates that after the borrower fully pays for the current debt, he is obliged to transfer the property as collateral for the mortgage received.
- The debtor asks the first creditor to remove the encumbrance from the pledged property before receiving the full amount of the debt. To avoid fraud on the part of the client, banks in such cases enter into an additional contract, which states that the borrower will repay the mortgage loan after a new transaction is made. It should be noted that this option is less common, since very few creditors agree to remain unsecured.
How is home loans being credited
With regard to the choice of a particular program, in this matter the borrower focuses primarily on the cost of the loan product, that is, the size of the rate. In addition, many take a new home loan to change other parameters, such as the repayment period or the repayment scheme. But, regardless of the purpose of the loan on a mortgage, this process always takes place in the same way, according to a standard plan. So, refinancing consists of the following:
- The debtor specifies from the first creditor the full amount that he has not yet paid to him, as well as the amount of the debt already paid off. This financial report must indicate the exact amount of all payments made.
- Applying for a new mortgage loan. It is worth noting that in some banks you can apply for refinancing online – on the official website of a financial institution.
- When the loan department approves the application, the borrower provides the financial institution that agreed to issue him a new mortgage loan, all the necessary documents. This list also includes a financial report, taken in the first bank.
- After a thorough check of documents and information provided by the borrower, an agreement is drawn up. The main document of the borrowing transaction is signed when all the refinancing details are settled.
- After the conclusion of a mortgage agreement, the bank repays the debt of its client by transferring the required amount to the account of the previous lender. From this point on, the borrower becomes the debtor of another financial institution.
What should be remembered
Before proceeding to mortgage refinancing, it is worth weighing the pros and cons. In particular, it is desirable to calculate the possible benefit from obtaining a new target loan. If after refinancing the amount of overpayment decreases slightly – no more than 2%, then there will not be much benefit. In addition, when considering a mortgage program, attention should be paid not only to tariffs, but also to the repayment scheme. After all, the total cost of the credit product also depends on whether the debt is paid back – differentiated or annuity. If the main purpose of refinancing is to change the term of payment of a cash loan, then it is all the more worth considering the feasibility of such a procedure.
Re-crediting a mortgage loan takes a lot of time to collect and process various documents. In addition, all additional costs, such as assessment of the temporary pledge, the borrower pays for themselves.