Banks continue to fight for mortgage clients. Thanks to this, we have historically the lowest interest rates on mortgages in Slovakia. Some banks refinance mortgages still pay a fee for early repayment of the original mortgage. Read about which banks are and what are the conditions.
What interests in mortgages do banks now offer?
Interest in new mortgages is currently in most cases lower than interest in those mortgages that people already have. It’s not a rule, but it’s not a rare phenomenon on the market. This is how interest looks today.
For some banks, interest is the same for everyone, and in some, real interest may be higher for some people, but also lower, eg at Tatra banka and Slovenská sporiteľňa.
In this article, I am not going to discuss the details of getting minimum interest and not getting a loan above 80% LTV, which is not quite common on the market today.
When does refinancing a mortgage make sense?
Mortgage refinancing is not worth everybody and it is not always worth it. The primary goal should be to agree on better conditions for a mortgage at a bank where you have a mortgage now. It’s almost in every bank.
What to consider when calculating and deciding whether to refinance or not.
What matters is how much you can get, respectively. save
The following things also affect this:
- Interest rate difference on old and new mortgages. The greater the difference, the more refinancing pays for savings.
- Repayment period. It has a big impact on how quickly the principal on the mortgage falls. Shorter time means higher repayment, lower overpayment and faster repayment of principal.
- Mortgage balance. If the mortgage balance is low, it can easily happen that even with a greater difference in interest between the old and the new mortgage, the installment difference will be uninteresting in saving and especially if it is related to eg. account management fee change.
- Account management fee and other charges. I certainly recommend taking into account, in addition to interest, related fees. There are banks where the account maintenance fee is € 0 and there are banks where you pay € 6 or € 9 a month. The fee can be deducted from the refinancing of the savings and, in the case of small mortgages, it is possible to save the savings.
The main reasons for refinancing a mortgage
When generalized, refinancing your mortgage makes sense if you answer multiple questions:
- Do you have more interest in your mortgage than 1.5 to 2% pa?
- Are you unable to negotiate lower interest rates on the existing mortgage, similar to the lowest market rates?
- Does an existing bank charge you a rate cut?
- Do you want to change your bank in addition to saving on your mortgage because of other services you are not satisfied with?
- Do you get a lower repayment by refinancing and also save on interest paid?