Having issued a mortgage, many borrowers are faced with a curious fact. It turned out that their creditor bank, and in particular Good Finance, decided to lower mortgage rates. For them, it was quite an unpleasant surprise, because, in their opinion, the benefit was lost.
Mortgage interest rate in Good Finance today
This information appeared in the summer of 2015, when it became known that the size of the fixed rate in Good Finance is 13.45%, on mortgage with state support – 11.4%, and for a young family the interest rate will be from 12.5 percent.
At one time, the clause on reducing the mortgage lending rate to six and a half per cent per annum in 2015 was included in the package of Putin’s election promises, but this commitment was not implemented by the Russian government, the banks decided to implement this position on their scale. Good Finance began to reduce mortgage rates on a par with other Russian lenders.
Current ways to reduce interest rates
At the time of drawing up a mortgage loan agreement, it is quite possible to use a variety of options to reduce the interest rate on a mortgage loan, but with a loan agreement already concluded, there will be only three such options at the borrower’s disposal .
You can reduce the loan interest by agreeing with the lender on changing the parameters of the loan agreement, issuing a loan at another bank to pay off residual liabilities under the mortgage agreement at Good Finance, or if there is an illegal levy of charges on the mortgage loan to be paid by the bank to decide whether the bank has reduced the rate by the amount of these fees in court. Wrongful overvaluation of the mortgage interest rate is also the basis for resolving this issue in court.
This savings option is best suited for the initial stage of using a mortgage loan with the annuity method of making payments when they are paid monthly, and the size of the payment does not change during the entire loan period. Given the differential nature of making mortgage payments, a reduction in interest is relevant during the entire loan period. Winning for the borrower here is possible with a significant difference in the amount of rates.
Other factors affecting the feasibility of refinancing are the absence in Good Finance’s loan agreement with the client of restrictions in the form of a temporary moratorium on early repayment of a valid loan and the moment when the difference between the rate of the existing and the newly concluded loan agreement is no more than one or two percentage points. The overpayment should be reduced by an amount greater than the amount of additional expenses for changing the existing agreement with Good Finance.
If these conditions can not be met, then at a nominal rate reduction, the level of overpayment and total costs will remain unchanged, and such refinancing loses meaning.
The restructuring of the loan agreement leads to a decrease in the rates for the use of funds on the loan, for example, if the mortgage repayment period is shortened, the interest rate on it may change to be reduced. The same thing happens with partial early repayment. The revision of the contract is possible not only in the direction of changing the dates and amounts, but in terms of the performance of obligations under it. Restructuring the contract does not only mean an increase in the term of the loan, but also significantly reduces it. A positive point here is the possibility of a significant change in the interest rate under the mortgage lending agreement. To reduce this rate, you must submit to the bank an application for changing the parameters of the loan agreement.
To review the mortgage loan contract by the bank, the borrower must submit an application with documents confirming an increase in the borrower’s income level, for example, an order for his promotion, a 2-NDFL certificate or other substantiation of his guarantees.
Partial prepayment involves a similar principle. The excess amount can be used to reduce the monthly payment or reduce its term. Under the second option, the amount of repayment of the principal debt should exceed the accrued interest, this method is most beneficial. The system of long-term repayment becomes clear when studying the payment schedule, if we compare the amount of the principal debt with the amount of interest. When the term is reduced, this value rises in favor of paying off the loan debt, and when the amount of the payment decreases, its change is insignificant.
Such a procedure is, in fact, a refinancing of a mortgage loan, practically being its new design. To reduce the mortgage leverage, the client will have to reassemble the entire package of necessary documents and go through the application review stage.
For a bank, the mortgage lending policy is implemented in terms of risk minimization. If the nature of the mortgage lending agreement and the credit policy of the bank provide for the possibility of adjusting the loan conditions, they should be used by the borrower, who, after consulting a Good Finance specialist, must submit the necessary application. This kind of consulting support from professionals will be very useful in calculating and choosing solutions to reduce the mortgage rate and help prepare the ground for using a loan loan under new, more comfortable conditions.
Restrictions in terms of using a mortgage loan in this case are excluded, you can always change your mortgage if there has been withdrawal from the contract by the borrower and late payments on his part for the last six months or a year.
This is another way to save on mortgage payments. Going to court is advisable if the bank violates the terms of the loan agreement, infringes the client’s rights as specified in the relevant regulatory enactments, increases the bank’s interest rate unilaterally or assigns additional fees to it. At the same time, you should immediately prepare for the payment of the services of an experienced lawyer, the representatives of the bank probably have legal justifications for their actions in stock.
Arguments to justify their position in court to the borrower should be sought in the mortgage agreement, having carefully studied it, and prepare for a lengthy trial. At the same time, it is not possible in any way to suspend payments to repay the loan for the duration of the trial, otherwise the borrower will violate the terms of the contract, allowing the court to decide on refusal.
If the structure of the mortgage lending contract is modified by a court decision, then the borrower must, after finding the legality of all clauses of the contract, submit to the lender a request for the latter to lower the interest rate due to violations of applicable laws on his part Having been refused, the borrower goes to court with a claim to recover illegally charged interest on the loan.
If the borrower belongs to one of the categories for which social status programs for improving the living conditions of Russian citizens are provided, then participation in one of such programs will be very useful for him.
An example is the use of maternity capital. This form of social support will be used if the borrowers have children in the period of mortgage payments. After they receive the certificate, they may well use it to partially pay the principal amount of the loan, thus reducing the time of payment or the amount of payment made monthly.
For young families, within the framework of state support programs, it is planned to receive subsidies or partial compensation of interest under the contract. According to the 2015 law, which provides for a reduction in mortgage interest, residential primary market facilities should be given no higher than at 12% per annum. For Good Finance, the size of the mortgage with state support provides for a rate of 11.4% for primary housing, introduced from July 1, 2015.