The end of the fixation period means for the client of the bank who is repaying the mortgage that the time has come to balance his loan. The bank will offer a new period of fixation with new conditions. It can also offer refinancing with its own but new mortgage product.
And of course, the client will look at other banks, how he could be with them with a mortgage (ie, he should do it). Refinancing with another bank is usually worth it. And who can, let him begin to negotiate new conditions already in the summer. Interest is expected to reach 3.5 percent for five-year fixation by the end of the year.
- Interest has been growing fastest in the last ten years
- Uncertainty is spreading more and more through the mortgage market
- Banks compete in competitive offers
- Interest can be fixed even two years before the end of fixation
- Those who do not meet the new conditions for mortgages may also refinance
- Refinancing requires three basic steps. And it’s not complicated
Interest has been growing fastest in the last ten years
Banks now have their harvested land. Interest rates on mortgages are growing at a rapid rate, on ordinary consumer loans as well. But on savings products such as term deposits or savings accounts, interest is not even moving.
Banks’ margins are increasingly larger. And even if we admit that the price of money on the interbank market (bank expense) slightly increases.
The fastest rise in mortgage rates over the past decade will not allow many bank clients to sleep. Last year they were able to enter into a contract with an interest of about 1.7 percent.
This year they will hardly fall below 2.5%. And by the end of this year, forecasts for further growth, up to 3.5% for five-year fixation.
Uncertainty is spreading more and more through the mortgage market
In recent months, many people have been uncertain about how much they will have to pay for a mortgage after its current fix. Depending on market developments, repayments could reach almost twice the current size. And that’s a big hole in the family budget.
On the other hand, this is the mortgage world. Certainty is always determined only for the duration of the current fixation, no future estimate of the future mortgage market.
Fortunately, since December 2016 (with the effect of the new Consumer Credit Act), 25 percent of the principal can be repaid annually in the form of a free extraordinary installment. Therefore, economists will surely recommend to anyone who has extraordinary repayment to do so.
Banks compete in competitive offers
Competition between banks in the area of mortgages is taking place in the sphere of differences between short-term and long-term mortgage loans. To be aware of the struggle and its results and potential clients of banks, is accompanied by many special marketing events, including special and time-limited offers.
As a result, banks came up with many innovations, but some products were written off altogether. For example, the so-called float mortgage, where interest is calculated from current rates of the Czhen Bank, while adding a predetermined surcharge, we will not find in the offer of banks.
On the other hand, the extension of fixations, additional services to mortgages, the possibility of applying for a mortgage in more people and the stopping of more real estate (this way can achieve 100% of the amount of purchased or built real estate) and other pleasant improvements were born.
Interest can be fixed even two years before the end of fixation
If you are one of those who are far from fixation and are expecting mortgage prices in the future with concern, you can fix the interest rate for the next fixation period two years before the fixation ends. It is necessary to ask the bank and conclude a special type of agreement with it. You can also apply for refinancing in advance, as some banks will accommodate this.
The new fixation can be closed even for ten, even fifteen years, depending on the bank’s offer. Given that interest rates may be expected to increase further in the future (the economy is growing, so the Czhen Bank is likely to continue to cool it slightly by raising the base interest rate), economists believe that long-term fixation of current conditions seems to be the best solution.
Those who do not meet the new conditions for mortgages may also refinance
At first glance, the Czhen Bank prepared a specific situation for people when it approved new restrictions on the provision of mortgages, with effect from October this year.
In 95 percent of cases, the mortgage will not be granted to people for whom the repayment would amount to more than 45 percent of gross income. And to whom would the total amount of the mortgage exceed nine-year net income.
However, who already has a mortgage does not have to worry about refinancing (ie entering into a new mortgage contract). These conditions do not apply to refinancing. They are only set for brand new mortgages.
Refinancing requires three basic steps. And it’s not complicated
Refinancing a mortgage is easier than its initial settlement. You already have all the “papers” on the real estate, so only the mortgage itself is documented. And the land registry changes.
Therefore, if you find a new and more advantageous mortgage than what the current bank offers you in connection with the termination of the current fixation, certainly do not hesitate to refinance.
You will get better credit terms. Moreover, refinancing itself has only three basic steps:
You fill out a request to quantify the current mortgage balance. This is the basis for negotiating a new mortgage with another bank.
The new bank will then reimburse your original bank for the rest of the mortgage loan. Of course, if you want to refinance with an existing bank, you won’t need anything like that.
Step Two (in case of refinancing with a new bank)
In agreement with a new bank on a new mortgage contract you sign a new contract. In a short time after its conclusion, it is necessary to insert pledge contracts of the new bank on the cadastre of real estate, and to further insurance contracts in favor of the new bank.
Step Three (in case of refinancing with a new bank)
You get a confirmation from the original bank that its mortgage on the property has expired. And you give the confirmation to the Land Registry. After the payment of the administrative fee, the bank shall delete the liens of the original bank from the Land Register. And puts a new one.