Refinance mortgage The buyer of a home usually takes out a mortgage upon purchase. In doing so, he chooses the lender that offers the best and cheapest mortgage at that time. The lowest mortgage interest rate is an important criterion, but not the only one. The conditions are of course also important when choosing the most suitable mortgage.
Cost of switching Subsequently, the mortgage often continues to run for many years with the bank that was chosen at the time of purchase. As long as the mortgage interest is fixed, people usually do not think about other options. That is logical: transferring the mortgage to another bank involves a lot of costs. Consultancy costs, a new appraisal report, a new mortgage deed at the notary - that is quite expensive. These costs are not easily offset by a slightly lower mortgage interest rate.
Home improvement A time when people do think about the mortgage is when the desire arises to renovate the house. The money needed for this is often borrowed with an additional mortgage. A visit to the notary may be required for such a renovation mortgage. If the mortgage is registered higher by the notary at the time of taking out, a mortgage increase without a visit to the notary may be possible. If that is not possible, a second mortgage or a personal loan is an option to finance the renovation.
Refurbishment for renovation A mortgage increase or second mortgage means that an extra amount is borrowed. This extra money can also be borrowed by transferring the mortgage to another lender. Whether that is interesting depends on the mortgage interest at your own lender and at other banks. When making a refinance, the old mortgage is repaid from a new mortgage. Do you need money for a renovation, for example? Then the new mortgage will be higher than the old one. This leaves money to pay for the renovation.
Lower mortgage interest Refinancing is advantageous if the mortgage interest at another bank is clearly lower than at your current mortgage provider. When borrowing extra money for renovation, costs are already incurred for appraisal, advice and possibly a notary. The step to the costs of a full transfer is then not that big.
Extension of the fixed-rate period Nevertheless, refinancing without an increase can also be beneficial. At the end of the fixed-rate period of your mortgage, you will receive an extension proposal from your bank. Sometimes the suggested mortgage rate is much higher than the rate you can get when you take out a new mortgage. Do other banks offer much lower mortgage rates ? Then a transfer can be cheaper for you than renewing at the same bank. Despite the costs involved in transferring.
Penalty interest Repaying a mortgage does not always happen exactly at the end of a fixed-interest period. Making repayments while the mortgage interest is still fixed can result in penalty interest. On radars.me.uk you can calculate approximately how high the penalty interest will be . The penalty interest partly determines whether refinancing the mortgage is interesting for you.