How to refinance a mortgage: when changing the loan makes sense
A practical guide to mortgage refinancing, comparing offers, including fees and understanding why a lower payment is not always a saving.
Mortgage refinancing can reduce costs, adjust maturity or simplify a loan portfolio. It only makes sense when the investor compares total costs, not only the monthly payment.
When to review refinancing
The natural time is the end of the fixation period, when leaving the bank is usually easier. Outside that date, early repayment terms and other fees matter.
The NBS advises comparing all costs, including land registry, valuation, early repayment fee and any fee for loan balance confirmation.
A lower payment is not always a saving
The monthly payment can fall simply because the maturity is extended. The investor may pay less monthly but more in total. Compare remaining maturity and total interest paid.
At portfolio level, refinancing can also align fixation dates or release cash flow, but it should still pass a conservative scenario.
Practical process
Before deciding, collect the current loan balance, rate, fixation date, collateral value and alternative offers. Then compare the net saving after fees.
- request offers from the current and new bank,
- include all one-off costs,
- compare the same remaining maturity,
- check the impact on portfolio DTI, DSTI and LTV.
Sources
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