The current interest rate environment offers mortgage creditors a never-ending opportunity, but we expect it to last only for hours.
The replacement of a home loan is almost completely unknown to Hungarian mortgage lenders, although we can save up to several million forints with a well-chosen debt settlement loan. In this article, we will look at how to make a difference, what opportunities we have, what we need to make good choices, and what we need to prepare for in practice.
What is the essence of redemption?
In practice, a loan redemption replaces one or more of our existing loans with a much more favorable arrangement. There are several ways we can ease our burdens with a mortgage loan:
- we can cut the loan interest
- we can reduce our loan repayment costs
- the maturity of the loan may also decrease
In addition, we can use a mortgage loan not only for mortgages but also for other loans from a financial institution. In this case, we can repay your personal loan, credit card debt, merchandise loan, overdraft and swap your loans in one fell swoop.
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But how is a loan cheaper?
The solution is very simple, it is enough to look only at the economic changes of recent years. We are currently at the end of a declining interest rate cycle, which lasts 7-8 years.
Those who borrowed mortgages at variable rates then saw their interest rates go down over the years, and as a result their repayment installments were getting smaller. So this borrower was doing well. Whoever borrowed at a fixed rate before, unfortunately, carved it, since his loan contract was not affected by interest rate changes.
For both types of clients
It may be a good decision to redeem your existing home loans now for the following reasons: As we wrote earlier, we are at the end of the interest rate cut cycle. This is expected to be followed by a long-term interest rate hike cycle. Central banks decide on interest rates.
The decision has already been taken by the central banks of several European countries, and the United States has interrupted with low interest rates and has begun to raise based on what has been experienced in the economy.