If there are offers with lower interest rates to repay the loan, as it is now, it is obvious to look for refinancing of the building savings loan. Why? Building savings loans have the same interest rate throughout the loan repayment period (unlike mortgages with a period of approximately 5 years fixed interest), usually around 5% (mortgage interest rates are lower). But even in refinancing the loan you may come across , so avoid the following 6 mistakes.
1. Refinance in the bridging period
Without at least two years of building savings, reaching at least 40% of the target amount and reaching the required rating number, you are in a bridging loan that is not very convenient for larger loans. Before paying off the loan at all, you pay interest on the target amount, you grow up and you do not actually die. The interest rates are between approximately 4.5 and 7%. If you want to switch to refinancing at this stage, you will also have high fees or penalties – the bridging period is fixed – and complicated refinancing conditions to limit the outflow of clients from building society loan providers. Therefore, it is sometimes better to wait for the refinancing of the loan until the bridging period is over. Or check that you have no fixation in the loan agreement agreed for the bridging loan phase – which, as with a mortgage, gives you the option of early repayment without penalties at the fixation date.
2. Unpredictable mortgage interest
This is not the fault of the payer of the loan, but rather a statement about the market situation. Although the current situation in the mortgage market is very good and mortgages with interest rates of around 3 to 5% are on offer, no one will guarantee that further developments will not have an upward trend. On the other hand, the building savings loan has the advantage that its interest rate remains the same throughout the loan repayment period . Therefore, it is worthwhile to consider and refine the market and your own wallets when considering refinancing.
3. You do not work with complete information
Yes, it is difficult to understand the offers of individual banks. But if you do not have complete information from everyone, it is difficult to compare it successfully. Do not be afraid to look for the information you are missing in the proposal and then ask your bank to add it.
4. You are putting aside home furnishings
When refinancing a building savings loan, the loan can be increased and the given amount used, for example, for other household equipment. If you know you need to replace windows or finally buy a new kitchen, consider incorporating these costs into one contract.
5. You are a decision, but you forget to take all documents to the bank
If you decide to transfer the loan to another bank, you need to have all the final building inspections (those that were secured in the original loan) and the current address of your permanent residence registered at the cadastral office. If you also want to change the property insurance, check the current risk assessment (eg floods) to see if the property is newly included in the more expensive zone.
6. You do not count all the costs
Only after you have calculated all the additional costs do you have to answer the question whether refinancing the loan is still beneficial for you. In addition to the account maintenance fee, there are other fees that the bank requires when handling a mortgage: a loan processing fee or a new estimate fee. In addition, your original building society may charge a fee for issuing a quantification on a specific date and an early repayment fee in the bridging period. You will pay a thousand dollars for the entry of a new contract into the Land Registry .