How to refinance a mortgage: step-by-step instructions 2020-2021

It is worth noting that refinancing is becoming a more popular banking procedure every year. This is due to the advantages and opportunities that it opens up for borrowers:

• lower interest rate on the loan;
• changing the loan term;
• possibility of merging loans;
• removal of collateral from encumbrance.

The reason for transferring a mortgage to another bank may be a citizen’s selection of an attractive offer with more favorable conditions than in the banking organization where the agreement is currently open. A housing loan is taken out for several years; it is possible that the situation on the lending market will change during this period.

It is advisable to transfer a mortgage loan to another organization in the following cases:

• the difference in interest rates in favor of the new mortgage is at least 2%;
• the transfer will help solve financial difficulties by increasing the term of debt repayment (monthly contributions will decrease, and the overpayment will increase slightly).

For the sake of a small profit, it is not worth moving from one bank to another, since the original credit institution will stop servicing and will not meet the client halfway next time. If you're having trouble paying off your debt, you could ask for a lower interest rate, but that usually doesn't work.

A bank whose loan is being repaid using the funds of another lender does not have the right to refuse or prevent the client from refinancing, however, in some cases, the transition is limited by the terms of the agreement, and taking out a mortgage from a third-party credit institution is a little more difficult.

What is mortgage refinancing?

From a formal point of view, this is a new loan with a lower rate that pays off an existing mortgage loan.
They take it to improve lending conditions - if they don’t like the rate, the size of the monthly payment, the quality of service at the bank, or if they need to take the apartment out of collateral for sale. The product is quite specific: during periods of stability in the refinancing rate, it is almost never used. The current situation in the Russian Federation, when over the course of two years loan rates first soared by 30-50% and then fell by more than half, is unique.
Right now, mortgage refinancing is most profitable.

Rules for drawing up an application

When filling out an application for mortgage refinancing, consider the following requirements:

1. Indicate the purpose of receiving money and the amount required for refinancing.
2. Write down the expected terms of the loan.
3. Provide the bank with reliable information, even if this characterizes you as a borrower in a negative way.
4. If necessary, indicate options for securing the loan. For this purpose, registration of property under collateral or guarantee is suitable.

Attach documents to your application that confirm your stable solvency. A sample filling and form are posted on the official websites of banks and stands in offices that provide this type of service to borrowers.

For example, in Sberbank these documents look like this:

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Let's look at an example

Let's assume that one of the clients of a large bank took out a mortgage loan in the amount of 2.5 million rubles for a period of 20 years. The rate at the time of the transaction was 15% per annum. But after 2 years, the economic situation in the country changed, and banks began to finance clients at 10.5%.

During this period, the amount of the principal debt on the loan decreased slightly, since the borrower paid mainly interest. The client considered that it would be advisable to reissue the loan at a lower rate. This will allow him to make his monthly payment more comfortable. The balance of debt at the time of the decision was 2,453,601.11 rubles.

An analysis of the situation on the financial market shows that refinancing a mortgage will not be profitable in all cases. You should contact the bank when:

• the difference in rates is at least 1-2% per annum;
• the client pays off two mortgages;
• at least half of the term has passed since the signing of the contract;
• the applicant has a foreign currency mortgage loan issued before 2015;
• the borrower feels that the debt burden is becoming unbearable for him;
• the user is not satisfied with the terms of cooperation with the credit institution (for example, the bank does not have enough ATMs or its offices are inconveniently located);
• the client wishes to change the currency of the mortgage loan.
• Important information: when re-issuing a loan, the borrower will face additional costs for assessing real estate, obtaining certificates and paying state fees, as well as insurance. This point should be taken into account immediately when making approximate calculations.

Refinancing will be successful if:

• a new bank and a lending program have been carefully selected (we will help you choose favorable refinancing conditions);
• the package of documents has been correctly collected and filled out (the slightest inaccuracy may cause a refusal from the bank);
• consent to the transaction is given by all three parties - the primary creditor bank, the client and the bank where it is planned to refinance the mortgage.

Is it possible to refinance without income certificates and where?

Refinancing without certificates is quite possible if clients choose a loan application program based on two documents (passport and SNILS or other document).

A simplified mortgage and refinancing procedure is available, for example, in:

• Sberbank (“Mortgage under two documents”).
• VTB (program “Victory over formalities”).
• Gazprombank (“Easy Mortgage”).
• Rosselkhozbank (“Mortgage under two documents”).
• DeltaCredit (“Mortgage under one document”) and in many other banks.

Sometimes lenders also offer this opportunity to their employees or clients who receive their salaries on a bank card. In this case, the bank already “sees” all the borrowers’ income, since they are reflected in the account statement. Read more about how to refinance a mortgage in your own or another bank here, and from this article you will learn about the program for refinancing preferential mortgage loans.

Reviews from mortgage providers

We took out a mortgage from Sberbank in 2014 for an apartment in a building under construction. At 14.25% while construction is underway and 13.25% after the house is commissioned. They paid for two years, glad that they managed to do it before the rates increased, and then they began to be sad.

By the end of 2021, our rate began to seem cosmic. We examined the mountain of bank offers and settled on Absolut Bank. Then he offered excellent conditions - 11.25% instead of our 13.25% per annum. The monthly payment was thereby reduced by 4,300 rubles, taking into account the preservation of the loan term. We grabbed a calculator and calculated that we would win more than 885 thousand over the remaining years.

But they soon realized that there would be additional expenses. With the new bank we had to insure not only the apartment, but also life and health. This is plus 10.3 thousand rubles per year. The only consolation was that Sber paid 7,600 a year for insurance, the difference is not too big. Additionally, we paid 2,500 rubles for the assessment, 300 rubles for an extract from the Unified State Register of Real Estate, and a state fee for re-registration of 668 rubles for two. But even after deducting expenses, they gained more than 830 thousand, and the monthly payment became, although not much, less stressful.

Advantages of refinancing at Sberbank

When refinancing debt at Sberbank, clients will receive the following benefits:

1. Simplified loan repayment process. If you combine several loans into one, you will only need to make one payment each month instead of several.
2. Your monthly payment is lower when you combine multiple loans into one.
3. If necessary, the bank can allocate a certain amount of credit for personal needs.

To refinance, first apply. After approval, you can collect all the necessary documents and enter into a new contract.

You can find all the tips on refinancing loans on our blog.

Information sources:

1. Mortgage refinancing at Sberbank.
2. Mortgage refinancing at VTB.
3. Mortgage refinancing at Gazprobank.
4. Mortgage refinancing at Rosselkhozbank.

about the author

Klavdiya Treskova - higher education with qualification “Economist”, with specializations “Economics and Management” and “Computer Technologies” at PSU. She worked in a bank in positions from operator to acting. Head of the Department for servicing private and corporate clients. Every year she successfully passed certifications, education and training in banking services. Total work experience in the bank is more than 15 years. [email protected]

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When is mortgage refinancing unprofitable?

In fact, not every borrower should get involved in refinancing transactions. There is a fairly extensive list of cases and circumstances when this should not be done:

1. A small amount of the remaining debt (up to 1 million rubles) and a short period until repayment (2–3 years or less).

The fact is that the borrower pays the bulk of the interest to the bank in the first half of the loan term; towards the end, most of his monthly payment goes directly to repaying the loan.

Let's look at an example:

• debt balance - 0.5 million rubles;
• maturity - 3 years;
• rate - 11%;
• the amount of interest payable is 89 thousand rubles. If the rate is reduced by 1 percentage point - to 10% - the amount of interest payable will decrease to 81 thousand rubles. It turns out that the total gain will be only 8 thousand rubles, which is comparable to the cost of appraising the apartment alone.

2. Small difference in rates (less than 0.5%).

Example:

• debt balance - 1 million rubles;
• maturity period - 5 years;
• initial rate - 10%;
• the amount of interest payable is 275 thousand rubles. When refinancing at 9.5%, the interest payable will be 260 thousand rubles. The difference will be 15 thousand. This is unlikely to cover refinancing costs.

3. There is no confirmed sufficient income.

Since you took out your mortgage, your official income may have decreased. The bank will refuse a loan if the payment is more than 40–50% of your salary.

4. The price of the apartment is equal to or lower than the amount of debt.

If the price of an apartment has decreased since the date of purchase (this is possible, for example, during a crisis), then it may not be enough to obtain a deposit, and then money and time will be wasted. Banks take the collateral value at a discount of 10–20% from the market price. So, if an apartment used to cost 3.5 million rubles, and now it’s 3 million, and you need 3.1 million rubles to repay the loan, then you will be refused. In this case, the maximum amount you can count on is 2.4–2.7 million rubles.

There are arrears on other loans over the past year or two.

B&N Bank proposal “Change the loan rate to a lower one”

Before submitting an application for refinancing to the bank, you need to familiarize yourself with the requirements that B&N Bank imposes on the initial mortgage:

• currency - ruble;
• minimum balance – 500 thousand
  ;
• timely payment of monthly contributions for the last six months
  ;
• The initial loan has been valid for more than six months
  .

Does your loan meet these requirements? Then read the terms of the loan:

• loan amount - 500 thousand - 30 million rubles if the loan was received in the Moscow or Leningrad regions, the cities of Moscow or St. Petersburg, and 15 million rubles if in other regions
  ;
• contract duration – from 5 to 30 years
  ;
• repayment method – equal payments;
• interest rate – from 9.65%
  .

Advantages of the Binbank program:

• favorable interest rate;
• It is enough that the loan was received at least 6 months ago.

Flaws:

• the minimum validity period of refinancing agreements is 5 years;
• issuing amounts in excess of 15,000,000 rubles in the regions is impossible.

When can you apply for mortgage refinancing?

The decision to reissue a loan to purchase a home must be justified. Especially considering the fact that since March 2021, the rates for this banking program have increased against the backdrop of the economic crisis and the declared pandemic, not every transaction will be beneficial for the client.

You should only contact the bank for refinancing if the debt repayment period has not yet reached half of the total loan term. And if there is less than a year left before the end of the loan payment, and the borrower has repaid a significant part of the interest to the bank, there is no point in concluding a new agreement.

As for banks, they do not seek to issue loans to refinance loans issued recently. Every lender wants to make sure that the client is solvent and reliable. If the existing debt is less than six months old, then it will be difficult to renew the contract.

Comparison of refinancing conditions

Comparison of refinancing conditions for the four largest banks in the Russian Federation:

Mortgage refinancing in the above banks is possible for a period of up to 30 years. If you sign an agreement for a short period, the amount of the monthly payment may be too large, and the borrower will not be able to pay it. But the client can refinance for a maximum term and minimum monthly payment, and if the opportunity arises, close the loan faster.

You can apply for mortgage refinancing on the official websites of banks. Waiting for a preliminary decision takes no more than 10 minutes.

The maximum loan amount for housing in the primary and secondary markets can reach up to:

• 20 million rubles for residents of Moscow;
• 15 million rubles for residents of St. Petersburg;
• 10 million rubles for residents of the Moscow region.

The largest amount of on-lending for a private house or townhouse with land:

• for residents of Moscow, St. Petersburg, Moscow region – 10 million rubles;
• for all other citizens of the Russian Federation – 5 million rubles.

The currency in which you can refinance a mortgage is Russian rubles.

Which mortgage can be refinanced?

Not all mortgages can be refinanced. There are a number of requirements for such loans:

• The client must have no current overdue debt, and the monthly loan payment must be paid on time for at least the last 12 months. Banks monitor this very strictly, and the presence of even minor delays can affect the decision;
• Each financial institution has its own conditions for this program. Some banks set limits on the amount of refinancing. And other companies determine a period before which the contract cannot be renewed;
• It will not be possible to refinance a loan that has less than 3 months left to pay;
• The bank will refuse to renew the agreement on new terms for those clients who have already had debt restructuring.

By the way! In order not to forget about loan payments, you can use. We will not only notify you in case of a late payment, but we will also inform you if someone tries to apply for a loan on you, about an increase in the credit limit, if the interest-free credit limit on the card has been exceeded, and much more!

In what cases is translation possible?

• Only an apartment from the secondary market can be pledged.
• More than 1 year has passed since the housing loan was issued. Thus, the new lender will be able to track the borrower’s payment history and evaluate him as a payer. If there have been delays, then such a client is unlikely to be of interest to any institution.
• The housing (collateral) meets the lender's requirements. Each bank has its own, so check in advance.

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We have collected original reviews on this topic here, reviews from real people, many comments, worth reading.

Is it possible to refinance a mortgage with another bank?

Yes, you can. Banks are reluctant to restructure their own mortgages because they lose interest income due to lower rates. Therefore, registration with another bank may be easier than with the primary one.

Currently, the following conditions for processing refinancing transactions are popular:

• the interest rate must remain unchanged throughout the entire loan term;
• money is issued only in domestic currency;
• good credit history in BKI (check your credit history);
• term of use of borrowed funds – from 1 year to 30 years;
• repayment is made in equal parts;
• there are no commissions for reviewing the application and issuing cash;
• issuance limit – 80-85% of the value of the property;
• collateral is required;
• possibility of early repayment of debt;
• charging late fees;
• issuance of funds only by bank transfer;
• increase in interest rate if insurance is canceled.

Banks issue loans to individuals only if:

• solvent;
• not younger than 21 years old and at the time of expiration of the concluded contract their age will not exceed 65-70 years;
• have a total work experience of at least 1 year and at least 3 months in the last position.

Why might another bank refuse?

The decision on each application for mortgage transfer is made individually. The bank has the right not to explain the reasons for the refusal.

Often a negative decision is made for the following reasons:

• Inconsistency of the refinanced mortgage with the requirements accepted by the bank. It must be issued at least 6-12 months ago, and there must be at least 3 months left until the end of the loan agreement. The mortgage loan being refinanced must not be in arrears and must not have been previously restructured.
• Bad credit history. Even if you regularly pay your mortgage, but are late in fulfilling your obligations on other loans, you should not hope for approval for refinancing.
• Your unstable financial situation. If the bank knows that your employer is having problems, they may also refuse to refinance your mortgage.

Step-by-step instruction

To conclude a new deal, the property owner must follow a step-by-step series of steps.

• Check with your “home” bank to see if they offer interest rate reduction services. This procedure allows you to reduce your debt burden without unnecessary formalities and expenses.
• Find an institution with a suitable program, clarify the terms of the loan and make calculations. To do this, you can use a special calculator.
• You need to find out in advance what additional costs are expected. Refinancing should be profitable only in this case it is worth resorting to this procedure.
• Advice to borrowers: when selecting a bank, it is recommended to use our mortgage selection service. With its help, you can refinance on the most favorable terms.
• Clarify the package of documents, collect them and submit them to the lending department of the selected bank.
• Fill out the personal information and submit an application. Many banks provide their clients with the ability to upload documents remotely. It is important to provide all data with maximum accuracy.
• Wait for the results of the consideration of the application (usually it takes no more than 2-3 days to review each application, but there are rare exceptions). If the bank responds remotely, this does not guarantee that the client will be issued a loan. A quick refusal may indicate that the applicant filled out the application form incorrectly.
• Contact your current lender with an application for early repayment of your mortgage.
• Take a certificate of the debt balance and personal details for transferring funds.
• Prepare a package of documents related to the property. If necessary, conduct a real estate assessment. This procedure usually takes 3-5 days.
• Sign an agreement with the new bank.
• Wait for the transfer of funds from the first creditor and pay off the old debt. Money is transferred by bank transfer.
• Take a certificate of full repayment of the debt to present it to the bank and a mortgage note with a note that the obligations have been fulfilled and the client does not owe anything to the financial company.
• Change the holders of the pledged property - contact the MFC and remove the encumbrance from the pledge under the first agreement.
• Provide the new lender with a certificate of ownership, not encumbered by collateral, and a recently received extract from the Unified State Register of Real Estate. This will serve as the basis for drawing up a new mortgage.
• Register collateral for a new transaction. When re-registration is carried out, the data of the second financial institution is entered into the register.
• Take out insurance for the collateral.
• Receive a modified payment schedule.
• Take the remaining money, if this is provided for in the loan agreement. However, in some cases this is not practical because additional money means additional debt.

Documents on the subject of pledge

The package of documents provided may differ depending on the type of real estate, but the following is considered the main one:

• assessment report;
• title papers;
• certificate of registration with the relevant authority;
• cadastral documents;
• certificate of ownership composition;
• permission from guardianship authorities;
• extract from the Unified State Register of Real Estate.

The list can be extended for each specific situation.

What documents are needed from your spouse?

Very often, a spouse acts as a guarantor for a mortgage, so they provide the same package of documents as the borrower. Passport, certified copy of the work book, employment contract, papers to confirm solvency, completed application form - the main package of documents.

Documents required to complete such transactions

Refinancing a mortgage typically requires the same documents as getting a regular mortgage. The potential borrower provides the bank with a package of documents with personal data, information on employment and income, as well as documents on collateral, which is currently encumbered and is awaiting re-registration. In some cases, the refinancing procedure may require the applicant’s TIN and SNILS.

You can confirm your income in various ways:

• a certificate from the accounting department in form 2-NDFL;
• statements from bank accounts where wages are credited, pensions or various benefits are received;
• certificate in the form of a credit institution.

If the applicant has a “salary” account with the creditor bank, and funds are credited there monthly, then there is no need to submit a 2-NDFL certificate to the bank.

Important: a distinctive feature of such transactions is that the client will also have to submit to the bank documents on a previously issued mortgage loan - a certificate of the balance of debt, a copy of the loan agreement, as well as full information about the refinanced mortgage (date of agreement, amount of monthly payment, interest rate and etc.).

The application on the basis of which the loan agreement is reissued must include the following points:

• information about the manager and the name of the financial institution;
• Full name, details of the document allowing identification of the applicant (passport);
• loan size;
• the purpose of the procedure;
• the period for which the agreement is concluded;
• interest rate (in numbers and in words);
• property provided as collateral.

When refinancing a mortgage, the homeowner incurs costs. Such costs include payment for certificates, extracts and state fees, as well as insurance and real estate valuation services. It is possible that the applicant will have to pay money for opening accounts. There is also a commission for transferring cash from the client’s current account at the bank with which a new agreement is concluded to his account at the first credit institution.

The cost of additional expenses can range from 15 to 50 thousand rubles, depending on the selected bank and the specific refinancing conditions. Please be aware that total costs may increase if lawyers are involved in the transaction.

Requirements for the borrower

Typically, banks provide refinancing services to Russian citizens, but VTB, Raiffeisenbank, and Alfa-Bank allow citizens of any country to apply for a loan.

To receive a positive decision on your application, you must meet the following requirements:

• age at the time of application - from 21 years (in UBRD - from 23 years), and at the planned date of closing the loan - no more than 65 years (in Sberbank - 75 years, in UBRD - 70 years);
• availability of official employment and income that allows you to repay the loan on time;
• work experience at the current place - from six months (at UBRD - from 3 months);
• total experience – from one year.

FAQ

Question: How to quickly calculate the benefits of refinancing?

Let's not forget that in addition to the difference in the interest rate, when calculating the effect of refinancing, additional processing costs should be taken into account. Not every borrower can quickly navigate the bank’s offers, so we offer you a formula from the BankInformService portal that can simplify the calculations.

Benefit from refinancing = (difference in monthly payment * number of months of loan) – funds already paid on the loan – cost of insurance – one-time costs for refinancing.

An example of using this formula:

In 2021, a married couple bought an apartment they really liked from the accredited developer VTB24 at 13.8% per annum.

A month later (one payment, 21,000 rubles) they began to arrange refinancing in their “salary” Raiffeisenbank at 10.9% per annum. The difference in monthly payment is 5800 rubles. The loan term is 10 years. The cost of insurance at VTB24 was 36,000 for the entire loan term (34,000 was returned), at Raiffeisen - 34,000 rubles. One-time expenses – 3500 rub. for assessment + 1200 rub. for inquiries.

We calculate: 696,000 (difference in monthly payments for 10 years) – 21,000 (amount paid to the original bank) – 2,000 (insurance cost in the original bank) – 34,000 (insurance cost in the new bank) – 3,500 (apartment appraisal cost) – 1,200 (cost of transaction certificates) = 634,300 rubles. (net benefit).

Question: What is the state support program for mortgage refinancing?

Officially, this product is called the “Program for Assistance to Mortgage Borrowers” ​​(adopted by Decree of the Government of the Russian Federation of April 20, 2015 No. 373). This is rather not a refinancing, but a restructuring of the loan in the same bank where it was issued.

One way or another, as part of the program, since the beginning of 2021, over 22 thousand borrowers have been able to reduce their loan burden by up to 200 thousand rubles (mortgage holders whose income has fallen by 30% or more since taking out the loan were covered by state support). There were many more applicants, but banks, according to their own algorithm, delayed the consideration of applications for some and let others through.

Since August 2017, the emphasis in the program has shifted to holders of foreign currency mortgages, the cost of servicing which has increased by more than 30% due to the depreciation of the ruble. It is planned to restructure about 1,300 such loans.

The procedure for re-registration of a mortgage

The algorithm for re-issuing a mortgage to another person looks like this:

1. You come to the bank with the person to whom you want to transfer obligations in order to obtain a preliminary decision on the transaction. After receiving such consent, the new borrower must collect all the necessary documents.
2. After the bank approves the borrower's candidacy, an agreement is concluded for the remaining debt on the loan.
3. You close your obligations to the bank, and the new borrower takes them on.
4. Renew the mortgage and register ownership.
5. The transaction is registered in the Registration Chamber.

Reviews from mortgage providers

Surprisingly, we got into this program! On May 25, I submitted the documents to VTB24, and since the end of June I have called several times to find out the status of the application.

On July 13, they called, informed about approval and invited me to fill out the form again. We approved a loan with an overpayment of 600 thousand less (due to a 200 thousand discount on the principal debt and 400 thousand interest savings over 25 years). Then I waited another 1.5 weeks, they called again and said that they needed to do all the preparation again - just like when refinancing. Appraisal, new insurance, new loan agreement. On August 9, the deal took place. The monthly payment was reduced by 5 thousand.

Question: Is there a tax deduction for a refinanced mortgage loan?

A property tax deduction is available to all home buyers with a mortgage, and it applies both to the cost of the apartment itself and to the interest paid on the loan. You can only receive a tax deduction once in your life.

Mortgage refinancing is the replacement of one home loan with another. Accordingly, if you have not previously issued a deduction, then you have every right to it after refinancing. You will have to provide the tax office with both the current loan agreement and the original one so that the tax authority can monitor the correctness of your indication of the loan balance.

Please note: the new agreement must indicate the purpose of the loan - mortgage refinancing. If you consolidate several products (mortgage, consumer, car loan, etc.), you can forget about the tax deduction - it does not apply to consumer loans secured by real estate.

If housing was purchased before 2014, the tax deduction calculation takes into account the interest actually paid in excess of the limit of 2 million rubles. Real estate purchased with a mortgage (including with subsequent refinancing) after January 1, 2014 allows you to receive a deduction of 2 million rubles on the principal cost of the premises, as well as in the amount of up to 3 million rubles on interest paid both before and after refinancing. That is, the maximum you can get in your hands is 5,000,000 * 0.13 = 650,000 rubles.

How to apply online for a mortgage?

You can apply for a mortgage online, in which case you will find out the decision without visiting the bank. To do this, just go to its official website and fill out a form.

For example, in the Gazprombank application you must indicate:

• FULL NAME.;
• contact details (phone, email);
• residential address;
• passport data (series, number, etc.);
• the city where you will apply for a mortgage loan;
• desired loan parameters (term, amount, etc.);
• information about the availability of a Gazprombank salary card.

The application will immediately go to the bank manager. He will contact you by phone if additional information is needed.