It is worth noting that refinancing is becoming a more popular banking procedure every year. This is due to the advantages and opportunities that it opens up for borrowers:
- lower interest rate on the loan;
- changing the loan term;
- possibility of merging loans;
- removal of collateral from encumbrance.
The reason for transferring a mortgage to another bank may be a citizen’s selection of an attractive offer with more favorable conditions than in the banking organization where the agreement is currently open. A housing loan is taken out for several years; it is possible that the situation on the lending market will change during this period.
It is advisable to transfer a mortgage loan to another organization in the following cases:
- the difference in interest rates in favor of the new mortgage is at least 2%;
- the transfer will help solve financial difficulties by increasing the term of debt repayment (monthly contributions will decrease, and the overpayment will increase slightly).
For the sake of a small profit, it is not worth moving from one bank to another, since the original credit institution will stop servicing and will not meet the client halfway next time. If you're having trouble paying off your debt, you could ask for a lower interest rate, but that usually doesn't work.
A bank whose loan is being repaid using the funds of another lender does not have the right to refuse or prevent the client from refinancing, however, in some cases, the transition is limited by the terms of the agreement, and taking out a mortgage from a third-party credit institution is a little more difficult.
What does it mean to transfer a mortgage from one bank to another?
Transferring a mortgage from one bank to another is called refinancing. That is, the new bank issues a loan to repay the previously issued one. Typically, the loan is issued at a lower interest rate, which makes the mortgage transition profitable. When refinancing, you can also change the loan term, and in some cases, get additional funds, for example, for repairs.
Also read: Refinancing a mortgage at Otkritie Bank: conditions, calculating the rate on a calculator and reviews
Mortgage refinancing
Refinancing is the re-crediting of a mortgage, that is, obtaining a loan from another financial institution to pay off mortgage debt. The main goal pursued by borrowers is to improve lending conditions and, accordingly, reduce the monthly financial burden. The best conditions mean:
- minimum amount of overpayment;
- reduced annual rate;
- extended lending period;
- cancellation of various commission fees;
- changing the currency in order to protect against a fall in the ruble exchange rate.
Refinancing is also beneficial when the client has several loans from different financial institutions. Refinancing at VTB will allow you to pay off your debts in full, and the borrower will repay only one loan with a smaller overpayment.
How to apply online for a mortgage?
You can apply for a mortgage online, in which case you will find out the decision without visiting the bank. To do this, just go to its official website and fill out a form.
For example, in the Gazprombank application you must indicate:
- FULL NAME.;
- contact details (phone, email);
- residential address;
- passport data (series, number, etc.);
- the city where you will apply for a mortgage loan;
- desired loan parameters (term, amount, etc.);
- information about the availability of a Gazprombank salary card.
The application will immediately go to the bank manager. He will contact you by phone if additional information is needed.
How to calculate the benefits of refinancing using an online calculator
To compare where a mortgage is more profitable, it is recommended to make a preliminary calculation. The mortgage calculator available on the websites of both VTB and Sberbank will help with this. You can also compare other banks to which you can refinance your mortgage:
| Bank | Loan amount, up to | Bid | Mortgage term |
| up to 30,000 rub. | from 9.8% | up to 30 years old | Go |
| up to 30,000 rub. | from 8.7% | up to 25 years | Go |
| up to 30,000 rub. | from 8.7% | up to 25 years | Go |
You need to enter the basic parameters of the current loan and the new interest rate at which you plan to refinance. The program will automatically calculate and display the following parameters:
- monthly fee currently;
- the amount of overpayment for the remaining loan repayment period;
- new payment amount (in comparison with the old one);
- possible overpayment at the rate in another bank.
Calculation of benefits using an online calculator is approximate. It is also necessary to take into account the associated costs when drawing up a new loan agreement: for real estate appraisal, purchase of new insurance policies, registration of ownership and encumbrances. You will have to pay again for all these services.
Bank conditions
When refinancing, the real estate collateral is registered in favor of the bank that issued the new loan. It will be necessary to re-issue insurance for the collateral for the risks of loss or damage. You can insure your life and health if you wish.
Typically, refinancing involves obtaining a new loan at a lower interest rate than under the current agreement. The refinancing rate at VTB starts from 8.8%, at Alfa Bank - from 8.99%, at Gazprombank - from 9%, at UBRD - from 9.15%, at Sberbank, Promsvyazbank - from 9.9%, in Raiffeisenbank - from 10.25%. If you cancel life insurance, it will increase by 1%.
The term of a new loan in VTB, Sberbank, Alfa-Bank, Raiffeisenbank, Promsvyazbank and Gazprombank can be 30 years, and in UBRD - 25 years. The maximum loan amount for refinancing in Raiffeisenbank is 26 million rubles, in UBRD and Promsvyazbank - 30 million rubles, in Alfa Bank - 50 million rubles, in VTB and Gazprombank - 60 million rubles, and in Sberbank - 7 million rubles .
Pros and cons of refinancing
Refinancing is a very popular service at VTB Bank. The large influx of clients is due to the following factors:
- low annual loan rate from 13.9%;
- the ability to combine up to 6 loans into a single one, including credit card debt;
- no commission fees;
- transparent transaction procedure;
- quick decision making;
- issuance of reserve funds for other needs.
Of course, like any other loan program, refinancing at VTB also has its drawbacks. Perhaps the most important of them is quite stringent requirements for borrowers and their mortgages. You will also have to collect an impressive package of documents. At the same time, difficulties may arise at the stage of collecting them, since Sberbank is not very willing to give permission to refinance with another bank.
Requirements for the borrower
Typically, banks provide refinancing services to Russian citizens, but VTB, Raiffeisenbank, and Alfa-Bank allow citizens of any country to apply for a loan.
To receive a positive decision on your application, you must meet the following requirements:
- age at the time of application - from 21 years (in UBRD - from 23 years), and at the planned date of closing the loan - no more than 65 years (in Sberbank - 75 years, in UBRD - 70 years);
- availability of official employment and income that allows you to repay the loan on time;
- work experience at the current place - from six months (at UBRD - from 3 months);
- total experience – from one year.
Official website of Sberbank of Russia
You can view your transaction history in the Sberbank Online mobile application: click the “History” tab in the bottom menu. In the web version of Sberbank Online, in the “Personal Menu” on the screen on the right, find the item “Sberbank Online Transaction History”.
First of all, make sure that you have confirmation of the debit (in an SMS from the bank or in a card statement). Then be sure to ask the recipient to check the credit (in an SMS from the bank or in the card statement). If you do not find the transfer, call the Sberbank contact center at 900 (from a mobile phone, the call is free). Our specialists will definitely help you.
List of required documents
Along with the application for mortgage refinancing, you must provide the bank employee with your passport, SNILS, a copy of your work record book and a salary certificate. Men under 27 years of age who are Russian citizens must provide a military ID. If you receive your salary on the card of the bank where you apply for a mortgage, it is not necessary to confirm your income and employment.
After approval of the application, you need to collect a package of documents on real estate and the initial loan:
- extract from the Unified State Register of Real Estate;
- appraiser's report;
- certificate of remaining debt;
- an extract from the house register;
- technical and cadastral passport;
- document providing the basis for the emergence of property rights, for example, a purchase and sale agreement.
If you are refinancing a mortgage on a new building, you should submit to the bank an agreement on shared participation in construction, an extract from Rosreestr, as well as a certificate of the remaining debt and a package of constituent documents for the developer (Charter, order appointing a manager, etc.).
Mortgage refinancing: subtleties of refinancing
Refinancing a mortgage means that the borrower takes out a new loan to pay for the previous one on more favorable terms. Refinancing is advisable, but not in all cases. It is worth understanding that re-issuing a loan entails certain costs. It is important to calculate all additional costs and take into account all the nuances.
How does mortgage refinancing work?
The essence of refinancing is as follows:
- The borrower finds a new bank offering a smaller amount of required payments, a lower interest rate, etc.
- The lender and borrower sign a refinancing agreement.
- With the funds received, the borrower repays the current debt.
Thus, the new bank buys out the encumbrance on the mortgaged property from the previous one. The borrower remains the owner of the property, and the encumbrance on the mortgaged property passes to the new lender. Some banks offer loans without collateral, but, as a rule, in this case the rate increases.
Refinancing has a number of advantages:
- •
reduction in the total amount of overpayment;
- •
reduction in monthly payments;
- •
reducing the payment period.
The disadvantages of the procedure include the occurrence of additional costs associated with servicing the service: you will have to pay for an assessment of the property, buy insurance and some bank commissions as part of the credit transaction. In addition, refinancing will require a package of documents, almost like applying for a new mortgage.
You can refinance a mortgage loan at a minimum rate of 7.99% per annum at Alfa-Bank. Reduce your monthly payment, shorten your loan term. We make a preliminary decision within a minute and complete all documents online. You will come to the bank only to conclude an agreement. Calculate how your mortgage will change using the online calculator on the website.
When transferring a mortgage loan to Alfa-Bank, you can receive an amount greater than the outstanding balance. You can spend additional money, for example, on renovations or purchasing equipment/furniture for your apartment.
When should you refinance your mortgage?
Recently, the key rate of the Central Bank has decreased, which entailed a decrease in mortgage rates. This means that the borrower can take out a loan at a lower interest rate: apply for refinancing at the bank where the mortgage is issued, or contact another organization.
To determine whether you need to refinance your mortgage, you should answer three questions:
- How long has it been since the debt began to be repaid?
- At what interest rate can you get a new loan?
- What additional costs will you have to incur and in what amount?
It’s worth refinancing your mortgage if it helps reduce the rate by at least 1–1.5%. It is best to compare the conditions and calculate how justified it is to transfer the loan to another bank. Alfa-Bank offers transparent lending conditions: no hidden fees or charges. You will be able to calculate the benefits of refinancing after pre-approval.
Refinancing also makes sense if no more than half the term has passed since the start of the loan agreement. It is most effective to refinance a loan with annuity payments at the very beginning: during this period, the main interest is paid for using the bank’s money.
It is not profitable to refinance a mortgage at the end of the term, when the principal interest has already been paid and the principal is being repaid. It will not be possible to save significantly if the housing loan was issued less than six months ago. During this time, lending rates did not have time to drop much.
When refinancing is completed, the right to receive a tax deduction is retained. A property deduction can be issued for the purchase of an apartment, as well as for interest on a mortgage loan.
Additional costs when refinancing
When refinancing there are a number of additional expenses:
- •
real estate valuation report;
- •
registration of a new insurance policy: life and health insurance, real estate, title;
- •
certificates from banks, extracts from the Unified State Register of Real Estate, if necessary;
- •
notarized consent of the second spouse to the transaction, if necessary;
- •
state fee for registration of encumbrance.
An increased interest rate will be added to the costs, which will remain in effect until the borrower transfers the encumbrance to a new bank. This usually takes about two months.
What you need to refinance
To refinance your mortgage, fill out an application on the bank’s official website. After this, provide the necessary documents to the bank and wait for approval. Then sign the loan agreement and take out an insurance policy. Subsequently, the old loan is closed, and the property is transferred as collateral to another creditor bank.
The list of required documents is determined by the bank. To refinance at Alfa-Bank you will need:
- •
passport, military ID (for men of military age);
- •
a copy of the work record book/contract, 2-NDFL, a certificate of income in the form of a bank, an extract from a salary or savings account, an extract from the Pension Fund of the Russian Federation, an extract from a salary account;
- •
mortgage agreement (provided only after approval of the application);
- •
purchase and sale agreement, DDU, acquisition agreement;
- •
statement of the refinanced loan, certificate of debt balance (provided only after approval of the application);
- •
assessment report (for secondary real estate);
- •
certificate of ownership or extract from the Unified State Register at the time of purchase.
In some cases, additional documentation may be required.
Refusals in refinancing: possible reasons
Most often, refinancing is denied for the following reasons:
- •
Damaged credit history. Delays in mandatory payments, violation of obligations when renewing insurance or submitting documents to the bank.
- •
Low creditworthiness. If during the process of paying off the mortgage the borrower's income level has decreased, there is a possibility of refusal.
- •
Making changes to the property. Illegal redevelopment is one of the common reasons for refusal.
- •
Decrease in the market price of the collateral. Due to price fluctuations in the market, the collateral real estate may become cheaper while the mortgage is being paid off.
- •
Inconsistency between the terms of the existing loan and the selected refinancing program. This applies to the loan amount, the age of the borrower, the intended purpose of the loan, etc. Sometimes banks reject applications submitted earlier than six months after receiving a mortgage.
- •
Waiver of insurance. One of the important conditions for obtaining a loan on more favorable terms is the registration of an insurance policy.
- •
Use of maternity capital. If maternity capital funds were used during repayment, then the new creditor faces a legal risk associated with the need to allocate shares to the children.
- •
Repeated refinancing. Not all banking organizations carry out re-lending transactions.
- •
Refinancing your mortgage with the same bank. They may refuse if the client applies for refinancing to the bank where he has a mortgage.
- •
Due to the divorce of the co-borrowing spouses, if they continue to jointly use the property and have not divided it by law.
Alfa-Bank requires only 3 full payments to be made before refinancing, and not 6, as most other banks require. Alfa-Bank also issues loans for refinancing only according to the passport, without extra charges to the standard rate of 7.99%.
Is it possible to refinance a mortgage with government support?
Preferential loans for the purchase of housing, which used government subsidies, can be refinanced on a general basis. The exceptions are housing loans with maternity capital and military mortgages. Refinancing requires a positive credit history, officially confirmed employment, and the absence of allocated children's shares.
conclusions
Before refinancing your mortgage, weigh everything well and calculate it. Compare the terms of the current mortgage agreement with those offered by the selected bank as part of refinancing.
The procedure for re-registration of a mortgage and costs at each stage
Let's consider the procedure for refinancing a mortgage after approval of the application and the costs associated with them:
- Property valuation. The property must be assessed again by a company that has the appropriate license. The assessment report is prepared in 3-7 days, and its cost is 6,000-10,000 rubles.
- Coordination with the bank. The appraisal report must be submitted to the bank along with all real estate documents.
- Renewal of insurance. If the bank has approved the property, to refinance the mortgage you need to purchase a new property insurance policy and, if necessary, life and health insurance. The cost of real estate insurance will be at least 0.15-0.2% of the loan amount per year.
- Conclusion of a new loan agreement. Immediately after signing it, the bank will repay the initial loan.
- Re-registration of collateral. After making payment on the initial loan, you must contact that bank to remove the encumbrance on the property. Then you should arrange a meeting with the new bank at the MFC or Rosreestr branch to register the pledge. At this stage you will pay the state fee (500 rubles).
- Providing an extract from the Unified State Register to the bank where the refinancing was processed. It must contain a note about the pledge of real estate in favor of the new bank. If you do not present this document within the time period established by the agreement (usually 2-3 months), the loan rate will be increased.
You may also incur additional costs for notary services. Depending on the situation, they will range from 1,500 rubles. up to 10,000 rub.
What are the benefits of mortgage recalculation?
Refinancing a mortgage at a lower interest rate entails additional costs in the form of issuing an insurance policy or registration costs. Therefore, it is important to calculate your own benefits from refinancing in advance.
Three main options when it becomes profitable:
- Great body of credit. Taking into account that the rate will decrease by only 0.5-1%, the overpayment will decrease several times due to the large balance amount.
- Long loan term. Interest is paid first, followed by the body of the loan. Therefore, early repayment from the primary lender is more profitable at the initial stages with a long term.
- High mortgage rate. Even 1% significantly reduces overpayment.
Many borrowers take out a mortgage from another bank without considering the associated costs, but these are the costs that determine the savings when refinancing.
Table 2.
| Mortgage debt, rub. | Savings per month, rub. | Re-registration costs | ||
| — 1% | — 2% | — 3% | ||
| 1 million | 500 | 1000 | 1500 | 15500 |
| 1.5 million | 800 | 1600 | 2400 | 21000 |
| 2 million | 1050 | 1600 | 3100 | 26500 |
| 3 million | 1600 | 3200 | 4600 | 37500 |
| 4 million | 2150 | 4250 | 6300 | 48500 |
| 5 million | 2825 | 5560 | 8250 | 59500 |
| 6 million | 3500 | 6870 | 10200 | 70500 |
All data in the table is based on an interest rate of 12.5% before refinancing the mortgage.
You can make the calculations yourself, taking into account the terms of your mortgage loan.
For example, on a loan you have 2,000,000 rubles left to repay within 10 years. When refinancing at Sberbank, the interest rate on the loan will be reduced by 2%. The savings will be 19,200 rubles per year and 192 thousand for the remaining period.
However, insurance and property valuation costs were not taken into account. They are charged one-time and amount to 26,500.
The actual savings when refinancing with Sberbank is 165,500 rubles.
Why might another bank refuse?
The decision on each application for mortgage transfer is made individually. The bank has the right not to explain the reasons for the refusal.
Often a negative decision is made for the following reasons:
- Inconsistency of the refinanced mortgage with the requirements accepted by the bank. It must be issued at least 6-12 months ago, and there must be at least 3 months left until the end of the loan agreement. The mortgage loan being refinanced must not be in arrears and must not have been previously restructured.
- Bad credit history. Even if you regularly pay your mortgage, but are late in fulfilling your obligations on other loans, you should not hope for approval for refinancing.
- Your unstable financial situation. If the bank knows that your employer is having problems, they may also refuse to refinance your mortgage.
How to refinance a mortgage at 6 percent in Sberbank in 2021
Despite the fact that Sberbank has reduced mortgage refinancing rates, they still do not reach the coveted 6%. The lowest rate is available to families upon the birth of a second child and for large families.
Basic conditions for refinancing a mortgage at Sberbank at 6 percent for the second and third child:
- The program is valid from January 1, 2021 until December 31, 2022. It can be extended until March 31, 2025, if the second (or subsequent) child was born in the family between July 1, 2022 and December 31, 2022.
- The maximum validity period of the reduced rate is 8 years. Three years at the birth of the second child, and 5 years are added at the birth of the third. We have devoted separate material to benefits and subsidies for mortgages.
- Only mortgages for housing in new buildings or under construction are eligible for the program.
- The cost of real estate is up to 12 million rubles - for Moscow and St. Petersburg. For other regions – up to 6 million.
- Life and health insurance is a must. Done immediately before refinancing.
- The loan agreement was executed no earlier than January 1, 2021, and the refinancing agreement no earlier than August 1 of the same year.
- Refinancing is possible provided that the second and third baby were born between January 1, 2021 and December 31, 2022.
- Children must have citizenship of the Russian Federation.
- There are no arrears on the refinanced mortgage.
Borrower action algorithm:
- Prepare a complete package of documents, supplementing it with a birth certificate for children in the period from January 1, 2021 to December 31, 2022.
- Contact Sberbank to fill out an application for refinancing under a preferential program.
- Review of the application takes 5-10 days. In case of refusal for a reason not related to the borrower’s credit history, it is necessary to request written confirmation with justification and send it to higher authorities.
