Hypothecary refinancing! Situation in the market

The Czech Republic's mortgage refinance market has recently gained importance. In recent years the Czech mortgage boom has rapidly matured with a rapid development and stable growth beginning in 2001 and a year-on-year increase of over 40 percent. Over the years, a solid customer base has been created. At the end of 2007 the total number of mortgages granted amounted to approximately 265,000, with the total mortgage volume reaching almost CZK 470 billion. The importance of the future potential of this "existing mortgage" market was recently realized by local banks and they are slowly trying to address this market. But an open customer hunt is most likely held back by the policy of the biggest bankers who fear the refinancing "Pandora's Box." A few small banks can already pro-actively offer mortgage refinancing through their mortgage products, which are especially designed to refinance and have favorable terms and lower interest rates. apartments for rent qatar

Many customers are currently fixing their interest rates on the market three to five years ago, as they account for more than 70% of all mortgages in our country. These customers must now consider how long they should set rates for the next season. In addition to choosing another period for their fixed rate, many people are seriously reflecting on the possibility of refinancing through another bank. The expiry of the fixed rate is the only opportunity for debt replacement without payment of significant penalties or pre-payment charges. There is a quite large interest rate difference among local mortgage banks, sometimes up to 1% p.a. Then the total saved refinancing can really be substantial because of the rate difference and also because the other loan parameters can be optimized (mortgage maturity, loan-to-value, rate fixation period, regular fees, etc.) What is refinancing of mortgages?

Home mortgage refinancing means replacing an existing mortgage debt with a newly arranged mortgage with (typically) another bank with different terms. In essence, this means that the customer will organize a new mortgage loan with a new bank and pay off his old debt via this new mortgage. Then the customer continues to repay the mortgage on the new bank.

Why and when to refinance the current credit?

Refinancing can be initially done by decreasing interest costs (by lower-interest refinancing), extending the time to repayment, reducing your regular payment obligations, often by borrowing for a long term or reducing or altering other mortgage risks (such as by refinancing from a variable-rate to a fixed-rate loan). The customer's own funds invested in the property can also be refinanced to raise cash for other investment or consumption. Especially when the value of the property has increased over the fixed period, cash can be raised against this value increase even though the client originally bought a 100% mortgage. This option appears very realistic for interest-rate mortgages fixed five or more years ago. A number of the main reasons for refinancing an existing mortgage

A key moment to consider refinancing options is the forthcoming anniversary of the fixed interest rate period. It is not wise to wait for the bank to announce the rate expiry of another fixing period for the customer. Banks tend to do this very late (perhaps deliberately), and do not give enough time to arrange a refinancing facility if the customer is not satisfied with their offer. It is wise to look for alternative solutions at least three months prior to the mortgage refinancing if refinancing is still possible.

Another reason to consider refinancing is the continued rise in market mortgage rates in the last few weeks, with rapid growth. The customer can now lock the current special low rate and refinance the facility up to one year later. That means that the client can currently sign a mortgage agreement with a new bank, with the current mortgage replaced by the new one within a period of one year under the terms of the new mortgage agreement. It is now likely that a much lower market rate can be set aside than the bank can offer in 3, 6 or 12 months, since interest rates steadily increased during the last year.

If the bank offers excessively high interest rates for the following setting period in comparison to what can be achieved with another bank on the market, it is precisely time to shop for possibilities of refinancing.

Especially where the customer took out the mortgage three or more years ago, a refinancing solution can be considered. Three years ago, local mortgages were pioneering on the market for international customers and conditions were unfriendly and far from what can be arranged now. Since then, the local mortgage market has rapidly matured and products for international customers have significantly evolved and progressed. Expats and foreign investors are currently more than likely to be able to refinance with better terms than in the past.

Expats and foreigners can now extend their repayment time by taking a long-term loan, with a maturity of up to 40 years, and significantly reduce the monthly repayment. Those who are aiming for a bought-to-let mortgage can pay their mortgage with a rental income easier.

Customers can replace the remaining mortgages with a refinancing facility at more convenient terms and can also get a cash-out (mortgage surcharge) provided the property value is adequate. In this way, a loan amount greater than the current mortgage can be refinanced and the cash difference can be used for other investment or consumption.

Customers can also get rid of their existing local life insurance facility, if requested by the previous bank, although the client does not want to be covered solely for mortgages.

Finally, however, it is not necessary for clients to re-establish their income and do not need to re-establish their property value if they have the original and are not older than five years.