Mortgage refinancing costs. Costs when refinancing a mortgage: when it is not profitable Additional costs when refinancing a mortgage

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The purpose of refinancing a loan is clear: to lower the interest rate or, in any other way, improve the terms of lending.
But what is there for the bank loan refinancing?
Issuance of a new loan.

For a bank to issue a loan, you need to assess the borrower's solvency, right?
Moreover, the fact that the former creditor bank has already assessed the borrower's solvency, however, as well as the fact that the borrower regularly and on time pays off his loan, is not an indicator for the new creditor bank.
That is, the bank checks a potential borrower as if the borrower simply applied for a loan. A positive credit history in another bank does not count: it does not cancel the check by the new creditor bank.

Real estate that is the subject of a mortgage must also be checked.
The fact that the former creditor bank had already checked this property and gave a loan against it does not mean anything to the new creditor bank: it will check it anyway.
And according to the results of the check, the new creditor bank may refuse to issue a loan.
In this case, the money spent by the borrower for the consideration of the loan application is not returned to the borrower by the bank. (If, of course, such a commission is provided for by the bank's rules).

Also, no one will refund the cost of the real estate appraisal to the borrower: the appraisal has been completed, the appraiser has done the work, his work must be paid, regardless of whether the bank gives a loan or not.

That is, the borrower, when refinancing the loan, has the risk that he will submit documents to the bank, but they will refuse to issue a loan: they did not give the loan, and the money had to be paid ... O-o-insulting-o-o!
But I will immediately make a reservation that usually, the appraisal of an apartment costs in the range of 4 - 5 thousand rubles, and the bank's commission for considering a loan application is about 1,000 - 2,500 rubles (and not all banks take it). Therefore, the monetary losses of the borrower, in case of refusal to issue a loan by the bank, are not too great. True, they can be more when it comes to refinancing a loan secured by a residential building, due to the fact that the appraisal of a house is more expensive than appraisal of an apartment.

But let's say they are ready to issue a loan to the borrower.

• The borrower must submit documents
• If the bank provides for a commission for considering a loan application, pay this commission.
• If the bank provides for a commission for issuing a loan, the borrower must pay this commission, even if he paid a similar commission to his former creditor bank.
• Withdrawing the collateral costs money.
• A new collateral is also a loss of money: and state. registration of pledge, and payment for preparation of documents
• By the way, in order to mortgage an apartment, you need to collect a package of documents: certificates from the BTI, an extract from the House Book and others. Some certificates are not free, you need to pay for them, and you will have to waste time in queues.
• Also, the apartment (or other real estate), which is the subject of the mortgage, must be assessed. Appraisal - it costs money and takes some time.

Thus, refinancing a loan is associated with certain costs for the borrower.

Therefore, when you calculate whether it is profitable for you to refinance a loan or not, it is not enough to calculate only the difference in percentage, you need to calculate all the overhead costs that arise during refinancing.

Competent refinancing.

Remember how we started the topic of refinancing?
From the fact that we decided to reduce the interest rate on the loan and that we applied to another bank because “our own bank” refused to lower the interest rate.

We now know that loan refinancing in a new bank will require additional costs.

How to be to reduce the interest rate and add. costs to avoid?
I reveal a little secret:

• You decided to refinance the loan, and after calculating everything, you decided that you would do it regardless of whether your bank lowers your interest rate or you have to take out a loan from another bank.
• After that, submit the documents and receive the decision of the credit committee of the new bank.
• But this is important: with the decision of the credit committee of the new creditor bank, you go to your bank and talk about reducing the interest rate.
• And, lo and behold! The bank, which previously refused to lower your interest rate even by one percent, can easily agree to lower the interest rate !!!
  Note: I do not state unequivocally that the interest rate will be lowered for you, but the probability is quite high.

Why is this happening?

When you came to your bank before, they say: “Lower my interest rate, otherwise the competitors have it lower,” the bank did not see the seriousness of your intentions. Moreover, the statement that: "Competitors are cheaper." Does not mean that: "Competitors are cheaper for you!"
You can refer to competitors for a long time without doing anything in order to refinance your loan.

When you come with the decision of the credit committee of another bank, then:
- firstly, it is clear that your intentions to refinance a loan are quite serious;
- secondly, it is clear that your intentions are quite feasible;
- thirdly, it is not profitable for the bank to lose a client, and it may be more profitable for the bank to lower the interest rate for this borrower (especially seeing that another bank can give a loan to their borrower on better terms).
If you do this, then perhaps you will be able to lower the interest rate and avoid unnecessary costs associated with refinancing.
If you fail to come to an agreement with your “own bank”, that's okay: after all, you decided to refinance the loan anyway.

A photo: Evgeniya Yablonskaya for BankInformService

Refinancing is one of the products that is gaining significant turnover today. This is largely due to the economic situation: interest rates on loans have dropped significantly, a significant number of borrowers wanted to reduce their debt burden. We have collected in one text answers to the most important questions about mortgage refinancing from representatives of 8 banks.

At what rate difference will refinancing be beneficial?

Experts agree that refinancing makes a reasonable economic sense if the difference in rates is at least 1 percentage point, or better - 1.5-2 percentage points. This is due to the fact that during refinancing there are many associated costs, including paid certificates and insurance, and this significantly affects the savings received from the difference in rates.

“Refinancing loans is beneficial to those who took out loans at high rates. For several years the interest on mortgages has been systematically decreasing. And now the difference in mortgage rates reaches 4 percentage points to the rates of 2013-2014. With refinancing, in this case, for the average borrower, the difference in payment is about 4,000 rubles per month, ”they say in Zapsibkombank. Calculating the final savings yourself is not so difficult.

Comment

Calculating the benefits yourself is pretty easy. Contact the bank that will refinance your mortgage, find out the size of the future monthly payment at a reduced rate. Next, calculate the difference in payments and multiply it by the number of remaining months of the mortgage. Then deduct from the amount received all the costs of paperwork, real estate appraisal, etc.

If we talk about specific figures, then it is possible and necessary to refinance a mortgage if the loan rate is higher than 12%, says Dmitry Mochalin, head of the mortgage lending center of the Russian Capital Bank in Yekaterinburg. His colleague from the retail branch of VTB draws attention to the fact that the term of the loan also matters - refinancing in the first years of mortgage servicing will be the most effective.

Comment

Refinancing a mortgage is beneficial already starting with a difference in rates of 1% and higher, but only in the first years of repayment of a mortgage loan (it will be most effective in the first 1-2 years), since it is during this period that the main part of interest and the minimum part of the main debt.

Sometimes it is advisable to change the lender, even if the difference in rates is small, but it becomes possible to extend the term of the mortgage.

Comment

Refinancing is not only a rate change, but also an opportunity to change the loan term. For example, if a family has a change in salary conditions, and the original loan was issued for a period of 10 years, then an increase in the loan term will reduce the amount of monthly payments. The main goal of clients when refinancing is to obtain new convenient and comfortable mortgage conditions.

Some banks offer in the process of refinancing a mortgage to combine several loans into one or receive an additional amount for repairs, for example.

Comment

Elena Vyatkina, head of the mortgage lending department in Yekaterinburg, Uralsib bank:

There is no general recipe for all occasions. It all depends on the purpose of the refinancing. It is possible to reduce the monthly payment by increasing the loan term even at the same rate. The borrower may have several loans with different rates, which he wants to combine into one and thereby significantly reduce the monthly burden on the family budget. In our refinancing program, you can combine mortgages, consumer loans and credit card debts into one loan, and also include an additional amount in the body of the loan to receive it in cash.

Let's calculate the benefits based on specific examples

To imagine how profitable refinancing can be, we asked representatives of credit organizations to make a calculation according to specific parameters - the most popular terms and amounts. On average, the savings are more than 500-800 thousand rubles.

Case from "Primsotsbank"

Anna Demidova, head of the sales department of the mortgage lending department of Primsotsbank:

Conditions for the previous loan: Loan amount 2 million rubles. Loan term 20 years Interest rate - 13.5% per annum. Monthly annuity payment 24 190 rubles. When refinancing a loan while maintaining the loan term, but with a decrease in the rate to the level of 10.5%, the monthly payment will already be about 20,000 rubles, but the savings on the interest rate for the entire loan term will be more than 800,000 rubles. Agree, the difference is significant.

Case from VTB

Elena Beltikova, Head of the Mortgage Loans Sales Department, VTB Bank Retail Branch in Yekaterinburg:

Suppose a client took out a mortgage loan for 2 million rubles for 15 years. The current loan was issued at 15.5% and the monthly payment on it is 28 679 rubles. After 2 years, the borrower refinances the mortgage, and the rate on the new loan is reduced to 11.75% (and this is the rate that the retail branch of VTB Yekaterinburg is currently offering). The monthly payment will decrease to 24,068 rubles. In this case, over 15 years of loan repayment, the borrower will save 719,331 rubles. Even if we subtract from this the additional costs of refinancing (collateral valuation, insurance), as we can see, the savings are substantial.

Case from "DeltaCredit"

Alena Pavlova, Head of DeltaCredit Bank in Yekaterinburg:

The borrower will receive income in the form of a decrease in overpayment in any case - and the less time he serves an existing loan at a high rate, the greater his benefit. Conventionally, if the borrower still owes the bank 2.8 million rubles, he has to pay the mortgage for another 14 years and his rate is 13% per annum, then reissuing the mortgage at a rate of 10.5% per annum will save him more than 500 thousand rubles.

What additional costs are borne by the borrower when refinancing?

Refinancing is not only 500-800 thousand rubles of savings, but also costs. Their size, as a rule, is not very large, but they also need to be taken into account.

First of all, this is real estate appraisal - it will cost 2-5 thousand rubles, depending on the object and the selected appraisal company. Also, in the process of refinancing, there are expenses for the state fee for registering a mortgage agreement (usually up to 500 rubles).

If the property was purchased in marriage, most likely, you will need a notarized consent of the spouse for the transaction (about 1,500 rubles). Almost all lenders require collateral insurance when refinancing - usually 0.3-1.5% of the value of the property. Perhaps, the terms of the contract will also provide for life insurance of borrowers - its size depends on the insurance company and the individual characteristics of the borrower (state of health, profession, age).

Additional costs may be associated with obtaining documents from the primary lender. Some (but not all) banks take a commission for certificates on the balance of debt and interest paid, a certificate of absence of delay, a certificate with the details for early repayment of a loan from the primary lender.

Always ask your new lender for a full list of additional costs: it is possible that in a particular bank the list of additional costs will differ from the standard one.

How long does it take to refinance a mortgage?

Typically, the entire process consists of five stages: 1. Assessment of the borrower.
2. Assessment of collateral (real estate object).
3. Transaction (signing of an agreement).
4. Issuance of a loan.
5. Re-registration of the pledge to a new creditor.
Depending on the bank and the individual characteristics of the transaction, the procedure may take a different amount of time. If everything is done promptly, then you can keep within 1.5 weeks. When collecting documents, you need to keep in mind that some certificates have their own expiration date.

Comment

Svetlana Kovaleva, Deputy Manager of the branch of Absolut Bank in Yekaterinburg:

As a rule, initially the borrower personally contacts the bank branch or consults by calling the "hot line". Next, he applies for refinancing his loan. The package of documents is standard: application form, passport, income statement, copy of work book, apartment documents. We consider the application promptly, no more than two days. Most often, the borrower finds out the decision on the same day or the next. Then he orders a report on the appraisal of real estate, takes certificates of the remaining debt and the absence of delays in the bank that previously issued the loan. It should be borne in mind that these certificates, as a rule, are valid for a short time (most often up to 5 days). Therefore, efficiency and consistency of actions between the bank and the borrower in the process of the transaction is very important.

The term of registration of mortgage refinancing is influenced not only by the efficiency of the selected bank and the promptness of the borrower himself, but also by the speed of paperwork with the original lender.

Since 2014, when registering a mortgage lending agreement, a state fee for registering a mortgage began to be levied from persons who entered into it, but the adoption of the amendments did not affect those applicants who are legally obliged to enter data in the USRN about a mortgage.

What is the state registration fee

A state duty is a mandatory payment for the performance of certain significant actions by a government agency. In the case of registration with Rosreestr, the employees of the state agency, having received directly or through the MFC offices, a package of documents for registering a mortgage, check the accuracy and correctness of the documentation, verify the details and include information about the completed registration in the real estate register.

All of the above actions are carried out on the basis of the current legislation, the state body has no right to refuse to perform registration activities at its will.

A contribution to the treasury is made in relation to each individual object of collateral, such a requirement does not apply only to property complexes.

Basis for payment of duty

The state duty for registering a mortgage is payable in accordance with the regulatory enactments:

• Mortgage Law
• Part II of the Tax Code.

A mortgage is an encumbrance on an immovable object arising from the conclusion of a contract or provided for by law. In order to determine whether the applicants should pay the fee, it is necessary to present which of the two types of mortgage is registered:

1. The one that is provided by law without fail. This happens in cases when a property is purchased on an installment plan or on credit. In order to secure the interests of the creditor, the acquired property remains with him as a pledge.

2. Arising from contractual relationships. The parties to the contract decide for themselves which object will be pledged.

The first option assumes complete exemption from paying the registration fee, the purchase of an apartment on a mortgage is more often than not, the second option, on the contrary, is subject to a duty.

But one should not confuse the registration of a mortgage (mortgage) and an apartment purchase and sale agreement, sometimes these two concepts are confused. For the registration of the contract for the purchase of an apartment, the parties pay a fee in any case. But the registration of the mortgage, which is transferred to Rosreestr along with the purchase agreement and certifies the mortgage (encumbrance) is free of charge.

The size of the state fee for registering a mortgage

State fee for registering a mortgage for legal entities:	For citizens (individuals) the following sizes are provided:	For all types of persons:
- If an encumbrance is imposed on a property complex, its value is taken as the basis. 0.1% of it is calculated, but not more than 60,000 rubles. - If the mortgage agreement is concluded between legal entities - 4000 rubles. - If an additional agreement to the contract is drawn up and this requires amendments to the USRN entry - 600 rubles. - If the collateral is a land plot - 350 rubles.	- If the parties to the mortgage agreement are individuals - 1000 rubles. - If one party is a citizen and the other is an organization - 1000 rubles. - When making changes to the contract, its termination - 200 rubles (regardless of the type of the other party). - If the property is a piece of land - 350 rubles.	- If the assignment of rights was carried out under a contract, in support of which there was a mortgage, that is, one of the parties decided to transfer its participation in this contract to a third party, then the fee is paid in the amount of 1600 rubles. - If the owner of the mortgage (paper certifying the right to a pledge) has changed, an amount equal to 350 rubles is paid to the treasury.

At the beginning of 2018, no increase in tariffs is planned.

Who and where should pay the state duty

The obligation to pay the state fee for registering a mortgage is borne by both parties. If the tax code released one of the participating persons due to its classification as a privileged category of citizens, then the amount of the contribution is reduced in proportion to the number of such persons.

For example, on the side of the pledger there is a citizen, who does not need to pay the duty, and the side of the pledgee is represented by two individuals, the duty in this case will be paid by the pledgee in the amount of 334 rubles each.

The duty is paid in cash to the bank, or by cashless payment. Payment details are posted on the official website of the regional branch of Rosreestr. They are different in each subject of Russia.

Refinancing is becoming an increasingly popular service among borrowers. After all, you can almost always find a more favorable interest rate than on an already opened loan. And then all that remains is to issue a new loan, the funds of which will be used to repay the existing loan. True, refinancing a mortgage entails additional costs, including insurance of the property, notary services, and so on. Therefore, you need to be able to calculate when mortgage refinancing is really beneficial for the borrower.

Refinancing a mortgage: what a borrower needs to know
Refinancing is obtaining a new loan, the funds of which will fully cover the debt taken earlier from the bank. But it is not worth changing the awl for soap - it is better to determine in advance which loan will be more profitable than the previously issued one. To do this, you should take into account the following nuances:
- how many positions lower the interest rate on a new loan - experts have calculated that even a difference of 2% per annum, if it is necessary to pay the mortgage for at least 3 more years, is already profitable. But it is better if the interest rate is lower by 5 or more positions - in this way it will be possible to achieve a more significant reduction in overpayment to the bank;
- how long it will take to pay off the loan debt - banks often require that at least six months remain before the end of the loan agreement.

What additional costs are possible when refinancing a mortgage
Mortgages take years to pay off, so the savings in interest from refinancing the loan will be noticeable. True, not all borrowers, looking for profitable options for a new loan, know about additional costs:
1. Expenses for notarization. A mortgage agreement, in which the collateral always appears, must be certified by a notary. Therefore, the costs of paying state fees and notary services are borne by the borrower.
2. The cost of insuring the property. An apartment or house purchased on credit is pledged by the bank. And the current legislation provides for compulsory insurance of pledged property. It is the insurance that will cover the risks in case of a possible fire, flooding or other disasters. As a rule, the bank sets a fixed percentage - it can be 0.3-1% of the loan amount. But other insurance options are also possible, including the choice of an insurance company. Sometimes the borrower is also offered to insure life and work ability - these costs are voluntary, they cannot be imposed. And therefore, whether to pay for such insurance - everyone decides independently.
3. Commission for the issuance of funds. This expense item may not be available in all banks. But some credit institutions set additional fees for opening a credit account or for issuing funds. To some extent, this compensates for the interest not received by the bank in case of early repayment of the loan.

Advantages and Disadvantages of Refinancing
Financial experts agree that refinancing a loan at a lower interest rate is always profitable. The main advantage for the borrower is the ability to reduce the overpayment to the bank. But the benefits may lie not only in this:
- the borrower can change the payment schedule - reduce the amount of the monthly payment and increase the loan repayment period;
- if you have several outstanding loans - for example, a car loan, a consumer loan and a credit card, you can replace all of these loans with one loan. This is more convenient, since it is enough to make one payment to the bank instead of several, and often more profitable, because it reduces the total overpayment on loans;
- change the loan currency - a dollar loan can be converted into a ruble loan. Thus, it turns out to protect yourself from the loss of funds during jumps in the exchange rate;
- You can even withdraw the property purchased on credit from the collateral. But this is only possible if it is possible to obtain a consumer non-targeted loan, the amount of which will be enough to cover the balance of the mortgage debt.
With all the advantages of refinancing, it also has disadvantages:
- the borrower will have to spend time looking for an attractive credit program, as well as collecting the necessary documents;
- after refinancing the loan, it will not be possible to receive a tax deduction of 13%, calculated on the amount of interest.
In any case, the advantages of refinancing outweigh its disadvantages. Therefore, do not miss the opportunity to save your own funds. When there are lucrative loan offers, you should take the time to arrange refinancing - it's worth it.