Little by little, large international companies have been absorbing the mortgage market in countries where small banks had control. One of the most attractive products of these international banks is refinancing (refinance in English) of loans; Let's see what they are looking for and what advantages there are.
1. They seek to clean the client portfolio
This often happens because when a bank acquires a loan portfolio, it takes it "as is," which means that some of the loans are in difficult condition or have collateral that a global bank considers high risk. So offering refinancing is a strategy to clean up the client portfolio, update data (which in not very orderly countries is chaos) and also to raise the value of potential customers towards the other products that the bank offers.
2. Balance credit rates to international currency.
This is a double-edged sword, but it generally benefits the borrower, who tends to have high interest rates because they have been calculated in local currency and are generally very high due to the uncertainty of the devaluation. As it is refinanced at an interest rate with stable currency, be it the Dollar or the Euro, it is clear that the interest is lower and those who analyze in the long term recognize that they will pay less; although a large amount of interest has already been paid.
3. Revalue the mortgage guarantees.
In case of Loan Network, they insist a lot on the renewal of loans, be these for refinancing or for a second mortgage on the same guarantee, considering that the asset has not depreciated and has possibly recovered its capital gain. This allows them to offer clients more than one alternative to refinancing.
His most important strategies are:
- Refinancing (refinance in English) under simple conditions
In the understanding that there is already a previous appraisal, a loan approval and closing costs, this institution ensures that everything is well simplified. That is good.
- Option to pay capital in advance
They maintain this alternative, to motivate people to save a good amount of money, providing a cash value and reducing interest. The example they show is if you have a loan of $ 200,000 and $ 2,000 is paid to the principal, you can ensure a savings of $ 63 per month, $ 760 annually and about $ 22,000 in total only for unpaid interest. This means about 1/2% in the interest rate, it is clear, since the first years are when more interest is paid, and when truncating the curve a larger area is projected than truncating it in the middle or at the end.
- Debt Consolidation
This Loan Network product offers it as an alternative, to those who have different debts watered such as credit cards, personal loans, mortgage debts and others that can be grouped into a single loan without paying different financial institutions.