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Loan re-funding can bring 20-30 pct smaller instalment

Re-funding a loan can bring an instalment by some 20-30 percent smaller, even if a person borrows by 25 percent more money than he needs in order to pay the old loan, shows a mortgage loan barometer that takes into account the lending possibilities. The survey quoted by the Business Standard daily on Friday was conducted by Credit Zone broker.

Credit Zone is a majority Polish-owned company that offers bank brokerage focused on mortgage loans. Credit Zone has forged partnerships with most big and medium-sized Romanian banks.

According to the analysed alternatives, a mortgage loan contracted three years ago, at the interest rate of that time, can be re-financed either by another mortgage credit or by a mortgage personal needs credit. In this latter case, the personal needs loan is by 25 percent higher than the amount required to repay the old loan, while the balance may be used by the borrower at his discretion. Moreover, the anticipated repayment fee is included in the amount repaid to the bank.

In the case of a 25-year-loan for which instalments were paid for three years, the re-funding may bring a smaller instalment but also extra money, provided that the client accepts repayment deadlines that sometimes may be longer and takes into account the possibility that the interest rate may be hiked at a later date.

'Actually, the banks' expiry dates represent a calculation based only on the original interest rate. After the fixed period ends, a variable interest is applied and the bank issues new expiry dates. The move may produce incorrect results and an inadequate information of the interested public', Credit Zone broker explained.

Sursa: http://www.rompress.ro

Tags: mortgage credit instalment smaller bring funding

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