The decision to take a loan or mortgage requires reviewing all the possible difficulties beforehand.
However, the predictions can fail. If so, should you consider refinancing the loan?
Below you will find an explanation of how this system works in Norway.
Refinancing Loans: What is It?
Before we pass on to the conditions of refinancing loans in Norway, it’s worth clarifying what does it really mean to refinance it. Speaking shortly, refinancing is the process of replacing the current conditions of existing loan or mortgage agreement. What is the point of such action? Most of all, making the terms more favorable for the client of the bank.
Most of the bank clients decide on refinancing when they experience difficulties with paying their monthly rate or simply notice that they lose financially with the settled interest rate. Also, when the interest-rate is not settled, but changes substantially according to the environment instead, credit holders tend to decide on such a move to generate some savings
Refinancing Loans: What Changes Can Be Made?
What changes can you make?
- Lowering the interest rate
- Changing the monthly settlements’ arrangement
- Prolonging the total period
These are only some examples of possible changes.
Basically any condition included in the contract can be the subject of such a change, connected to refinancing the loan. Obviously, when such changes are made, there is a necessity of preparing a new contract that includes them.
Refinancing Loans in Norway: Conditions
The conditions of refinancing loans are usually defined not by the state laws but particular banks. Like any other country in the EEA union area, Norway allows refinancing loans.
The most common case of refinancing is combining all the financial commitments into one consolidation loan. It also applies to cases in which the house covered by the mortgage increased its value.
The requirements are defined by your bank — it’s worth getting familiar with them before signing any kind of contract. To receive a loan in Norway, you should be a resident of the country with valid tax number and proven income. To be confident of your possibilities, you can obtain a pre-qualification letter which points out how much you can borrow without getting into financial troubles.
If you keep good track of your finances and pay attention to the fluctuations on the financial market, refinancing can be a great way to increase your savings. Analyze the conditions of your current agreement with a professional advisor to be sure that you are making a good investment.
Article prepared in cooperation with LOCALMARKET.