Want to refinance a loan? Here’s what to watch out for!
For many of us, refinancing a loan seems to be the only way by which we can still pay interest rates. An alternative to it could be trying to get a loan from a private lending company like easy-go. However If you decide to refinance a loan, remember that the new loan must be cheaper, that involve lower costs than the old. Otherwise, refinancing is not justified. The first ting to be done is to calculate the annual percentage rate (APR) – Annual percentage rate must be less than that paid on the old loan and must be valid for the entire period of the loan, not just during any promotions offered by the bank.
Pay attention to collateral value – collateral value (in the case of a housing loan mortgage) should not be decreased so much that it does not cover the loan amount. Usually, banks require mortgage value representing around 130% of the credit. If the mortgage is lower, you can appeal to an additional warranty. Your income must pay indebtedness – Income must be at least the same level as when the loan was old, especially if it is desired to decrease the cost of borrowing. Now banks are very restrictive in terms of total loans, so are not likely to get loan due to a very high level of debt. In this case, you can call a debtor co-payers or if the bank accepts it.
Beware of the fees – Costs for refinancing can be quite high for certain banks. The most important commissions one should keep in mind are the early repayment of the new loan granting fee and other fees such as enrollment in the electronic archive for valuing real estate collateral, notary fees, insurance, etc. In what currency you refinance – Currency of the new loan is extremely important, especially when it comes foreign currency, and that due to currency risk. It occurs when the currency depreciation against the currency.
Calculate the total cost of credit – total cost of credit is important to calculate both when granting and the end. APR is the total cost includes not only interest but also all related commissions. Annual Percentage Rate helps us to compare different offers refinancing of the same type, the same amount repaid over the same period. It is good to know that the monthly rate will be reduced by the repayment period will be higher. But you have to take into account the fact that the higher repay a loan over a longer period of time, the more you will pay more in the end, because the interest rate will be higher. Pay attention to efficiency – As refinancing to be effective, all costs incurred by the customer must then recovered through cost savings achieved. Dividing the cost of refinancing the amount saved (the difference between the current rate and refinancing rate after) gives the refinancing payback period in months. Only after this period the customer will feel the benefits of refinancing. As said earlier you can also consider a private loan provider company like easy-go for a hassle free and quick loan approval.