If you took out a mortgage more than 2 years ago, it might be very convenient to evaluate a renegotiation of the conditions. Today, in fact, interest rates are much lower and your financing, especially if at a fixed rate, could be really too high compared to what you should pay today.
Precisely for this reason we always advise to evaluate the possibility of renegotiating the mortgage and to understand if the actual savings that one would enjoy is sufficient to justify this operation (90% is!). To help our readers we wanted to make this little guide about it. For any doubt, simply go to the bank and ask for information on specific methods and costs.
Renegotiate the mortgage: better Unicredit or Intesa?
The first question to ask is: what is the best bank to renegotiate the mortgage? Unfortunately it’s not that simple, so our first tip is to get as many quotes as possible. In fact, each bank applies different conditions according to the specific case.
Obviously we can say which, in our opinion, should be contacted absolutely for a quote as they offer interesting conditions. In particular, the latter is offering mortgages at very advantageous interest rates. The variable rate can even go below 1.5% and the fixed rate can be subscribed to 2.5%, all without the need to pay preliminary fees or opening procedures.
Unicredit, on the contrary, is slightly higher (1.80 and 3%) but, however, offers one of the most interesting products on the market. Just think that those who opened a mortgage before 2015 most likely have a fixed rate of not less than 4%. The savings, in terms of monthly installments, would be significant.
We must never forget, however, that if we talk about mortgage renegotiation we must stay with the same bank, otherwise we talk about surrogate. So how to move? Our suggestion is this.
Get at least 3-4 quotes from different banks, choose the 2 most convenient and then go to your bank for a mortgage renegotiation. Often it is possible to extract better conditions or, in any case, comparable to those proposed by other lenders.
Is it convenient to renegotiate the mortgage?
In the most absolute way, renegotiating the mortgage turns out to be a very convenient operation, given the current interest rate situation. Obviously, if you have a variable mortgage, the advantage in this sense may not be sufficient. But as far as fixed mortgages are concerned, the advantage for the client is truly significant.
In some cases, you could even save well over 100 USD per month. An amount of money that, although not enough to make life change, can still offer some breathing space to many families in difficulty today.
But how exactly does it work? By renegotiation of the loan is meant, from a technical point of view, the re-evaluation of the conditions to which the bank has granted us the loan. In essence, he goes to the bank and says: the conditions under which I had taken out the mortgage 5 years ago are, today, obsolete. If you want me to stay with you, we need to review the conditions. What interest rate can you apply to me now?
In common use, however, the subrogation of the mortgage is often linked to the renegotiation, which as we well know are 2 different things.
How to renegotiate the mortgage with the same bank
As we have seen, therefore, renegotiating the mortgage means staying with the same bank but negotiating to have the most advantageous and appropriate conditions for the historical moment that is going through.
It should not be forgotten, therefore, that there are some parameters that cannot change (creditor and debtor must remain the same) while others can be modified (interest rate, installment duration, etc.). A very important aspect to remember is precisely that relating to duration.
To lighten an excessively heavy installment, in fact, you could opt for a double move, namely lowering the interest rate and lengthening the duration. Let’s try a practical example to make this aspect even clearer. Mr. Boom has a mortgage of 150 thousand USD at 20 years and a fixed rate of 4%. Its current installment is around 908 USD per month.
By renegotiating the mortgage, Mr. Boom manages to obtain an interest rate of 2.80% and the installment becomes $ 816 monthly. Already so we are at a monthly saving of almost 100 USD. Let’s say we want to lower the installment further. Mr. Boom decided to ask the bank for a new 25-year deadline. In this case the installment would drop to just under 700 USD, a saving of 200 USD per month.
With this practical example we realize how high the potential of a renegotiation of the existing mortgage can be to obtain lighter conditions and in line with your needs.