Should I Refinance the Credit?

What is Refinancing?

Refinancing, or repair credit, is one of the banking services that represents the re-crediting of several current loans at the expense of a new one with more favorable terms. In essence, refinancing a loan means drawing up a new loan agreement in which the Bank provides the borrower with a longer-term loan with lower interest rates and reduced monthly payments. The use of refinancing helps to reduce the financial burden on the borrower, especially at times when it is difficult to pay for current loans. Well should i refinance the credit?

What are the mortgage interest rates?

Interest rates on mortgage loans have increased by 7 points in recent months due to market fluctuations and reached some decline between September and October. In November, the interest rate for mortgage loans is 0.80%, while banks observed changes in current interest rates from 0.90% to 1.25% due to different interest policies. According to forecasts related to interest rates on housing in the coming months, interest rates will continue to decline by the spring of 2019. In light of these indicators, financial experts are still cautious in longer-term forecasts.

Will Monthly Payments Decrease After the Credit is Refinanced?

Refinancing of the loan is carried out to close current loans and change interest rates and repayment schedule. To reduce the interest rate, it is recommended to choose a short-term loan plan. To reduce monthly payments, a long-term refinancing plan is appropriate. Since the extension of the maturity date would mean more payments, the interest rate would be much lower than in the short-term refinancing plan. The short-term maturity of the loan increases the monthly amount, but reduces the level of interest rates in the long term.

Is the Long-Term Plan Better?

Long debt is not the recommended method, since they require more time and money for the payment of the entire amount of principal and interest.  As the maturity of the debt increases, the total amount of interest increases day by day, as the principal loan received from the Bank is repaid over a long period of time. For this reason, a shorter loan repayment period may be more profitable. But the fact that monthly payments will be significantly higher as a result of shorter maturities may pose an additional risk to the borrower in terms of the difficulty of paying on time. The important thing is that you have to close your debt without problems and without delays.

If you have any questions about refinancing, you can find all the necessary information on this topic on our website.

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