You have already paid back a portion of your loan over a number of years, at the same interest rate, and are you wondering if it can not be more beneficial? It is possible thanks to a revision of your loan. You’ve probably heard about this mechanism, but what about? Is it really interesting for you?
A review means that you stop a current loan with a defined interest rate and agree on a new interest rate with either the same bank or a new bank. This change can be very beneficial if the interest rate is (a lot) lower than when you took out the loan.
Review: how does it work?
To begin, compare the interest rates offered by different banks. You can request a quote anywhere. Nowadays, it is also possible to simulate online what a bank can offer you. This way, you can immediately see where the most advantageous offer is. This will allow you to have an advantage in negotiations with your current bank. When there is an agreement between the two parties, a new repayment plan is established.
You certainly do not have to be afraid to ask your current bank for advice. They do not have to answer your question, but they can negotiate. In addition, banks do not like to see one of their customers go to the competition.
Do not forget the costs
It must be borne in mind that a loan, certainly less expensive, is never free. There are still a number of costs that you will need to consider. We grouped them together:
- Reinvestment costs of up to three months of interest
- Fees that fluctuate between 250 and 700 euros
If you change banks:
- Costs for deletion
- Estimate costs (if mortgage)
- The new bank may also ask you to open a new current account or purchase insurance
To find out if an exam is a smart decision for you, it’s better to see if the benefits outweigh the costs. So, there is no universal rule. The only thing you need to take into account is this: if you have to repay for a long time (15 to 20 years), it is certainly a good idea to revise your loan. You have more time to amortize, see recover, costs.
So, reviewing loan can often be interesting, but always work carefully. The costs may be just as high or higher than the benefits.