Loans revised

Loans revised

Who doesn’t want to take advantage of the low interest rates? Also and especially if you already have a (more expensive) loan. The financial markets are in full swing. However, before you proceed to review your loan (s), you must assess whether it is interesting to take out a new loan in your specific situation, with new conditions as well. This applies to all current forms of loans.

Refinancing of loan

Refinancing of loan

With a refinancing you take out your loan by paying off the remaining capital in one go. Then you can start a new loan with a lower interest rate. At the end of the ride you pay less interest.

In addition, you must determine whether you are financing the new loan from your current or another lender. Note that your current bank is not obliged to refinance, but you can cancel your loan and go to another lender.

If you opt for a revision of your loan with your current lender, you must take into account the payment of both file costs and a so-called reinvestment fee (3 months interest on the outstanding amount).

But more things are playing:

How much is the new interest rate?

How much is the new interest rate?
  • So how much do you have to pay less per month?
  • So how much less do you have to pay back in total?
  • What costs does your bank charge for taking out the old loan?
  • What are the file costs for the new loan (possibly with the new bank)
  • What are the costs for canceling the old mortgage (if you change bank)?
  • What are the costs of the new mortgage (if you change bank)?
  • How much is the new debt balance insurance?

The saving in many cases outweighs the costs of the revision. You must therefore check whether the lower interest rate outweighs the additional costs of revising the financing. For an average file we can state as a general rule: revising a loan is worthwhile if the interest rate falls by around 1%. From then on, the reduced interest charge will outweigh the additional costs. Interest has fallen by around 2% in the last five years. This means that it is worth it for most consumers.

Also don’t compare apples with pears. For example, it is wise not only to look at the total cost but also to pay attention to the correct way of comparison. It becomes quite difficult to compare the costs of a fixed-rate loan with a variable formula.

But don’t be put off or discouraged by this. Also not by your own bank. Think about the formula that you want. Pay less, have a shorter duration … Go shopping for a lower interest rate. Comparing is saving money. You can have a quote made for each desired lender for the desired formula. Do not stare blindly at the lower interest rates but take into account all costs as stated. Also do not forget to first go to your current bank as a counter proposal.

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