Share
How do you know that Have to refinance?
If referring to the term "refinance", everyone understands that it is to get a new loan to cover the old loan. In order to lower interest rates and the repayment period also decreased
Notice that when requesting a loan from a financial institution during the first year (for example 1 - 3 years), financial institutions will offer promotions to motivate borrowers. With a low-interest rate and is fixed. But after the promotional period is over, the borrower must pay floating interest. Which has a higher interest rate.
Refinancing can be made for both new loans from the same financial institution or request a loan from a new financial institution to pay the original loan. For example, in 2015, requesting a loan from financial institution A and year 2019 to refinance
Case 1: Request a new loan with financial institution A to pay the previous loan.
Case 2: Request a new loan from financial institution B to pay the previous loan from financial institution A.
For refinancing It can be mortgage, car, motorcycle, credit card, etc. Therefore, before refinancing, it must be calculated whether it is worth it or not.
Initially, having to compare lower interest rates will help save more than the costs incurred by refinancing or not. Such as mortgage collateral fees, expenses for appraising collateral values, insurance expenses, the penalty for former creditors in the event of termination of the loan before the period specified in the contract.
If it is found that the cost of operation is high or very time consuming but saves a little money, no need to refinance
Example of comparing the costs that will be incurred and the saving interest for initial evaluation before refinancing decisions.
Mr. Kor has borrowed money to buy a house from Bank A in the amount of 2,200,000 baht which has been loaned for 3 years while the remaining principal is 2,000,000 baht. The current interest rate is 7%.
Mr Kor is deciding to refinance to Bank B, which will charge a 3% fixed interest for 3 years, after which it will be at floating rates. (It is assumed that after the promotion has expired Will use floating interest rates Which is equal to the interest rate of the original financial institution)
|
Saving interest |
Refinancing expenses |
|
Interest savings = principal x the interest rate that
Saving interest = the interest rate at the institution Existing finance - rates The interest of financial institutions Will refinance
Number of promotional years = Number of years the financial institution
Calculated as follows Interest saving (approximately) = 2,000,000 x (7 – 3) x 3 100 = 240,000 บาท
Interest saving approximately 240,000 baht |
Expenses paid to government agencies - Mortgage fee (1% of the credit limit Mortgage but not over 200,000 baht - Stamp duty (0.05% of the loan amount but not more than 10,000 baht)
Expenses paid to the new financial institution - Security assessment fee
= 2,000,000 x 1 100 = 20,000 บาท
= 2,000,000 x 0.05 100 = 1,000 บาท
Estimated appraisal fee (approximately) =3,000 บาท Total estimated cost 20,000 + 1,000 + 3,000 = 24,000 baht |
|
Once calculated, refinancing will save approximately 240,000 - 24,000 = 216,000 baht. |
|
Source: Bank of Thailand
Note: The calculation is only an example. Should ask for details from each financial institution before deciding to refinance.
Currently, there is a formula table. Which each financial institution provides Just fill in the information and can compare quickly.
Before deciding to refinance Initially, the need to compare interest rates paid throughout the original loan life. With new loans to refinance which one is lower. In addition, see other conditions such as installments per month, installment period, or certain conditions from financial institutions.
Next, look at the costs. What are the fees for all refinancing that must be paid?
Including what conditions for the redemption of the existing credit Because if the condition is wrong, will have to pay a fine as well
Let's look. The decision to refinance is an analysis by comparing all the costs compared to the total amount of interest that can be saved. If it looks worthwhile, contact the financial institution about refinancing the procedure. May try submitting documents to 3 or 4 target financial institutions and choosing to refinance with the financial institution that provides the highest credit limit. Under conditions of payment by installments and similar fees.
Of course, refinancing is made to maximize the benefits, that is, the cost of interest rates is reduced to the most. However, before deciding, there will be detailed information including comparisons that requires careful resolution. If analyzing that refinancing is worthwhile then must do but if not worth it and waste time, continue to use the same financial institute.
