Debt refinancing is becoming increasingly common in European countries and other parts of the world. Countries like Norway are at the forefront of this trend.
This is given the number of people who are indebted and have trouble servicing their debts because of harsh or unfavorable loan terms and conditions. You can see this report if you would like to see details about debt refinancing activities in European nations.
Understanding more about debt refinancing is crucial for those considering it. For one, this will ensure that they are making the right decision and know how to properly secure this credit line if they are. In light of this, prospective borrowers have common questions that they need answered.
Fortunately, a couple of these questions will be raised and answered in this article. So, keep reading to find answers about refinancing loans, especially in a place like Norway.
What Is a Refinance Loan?
It is a newly secured credit line to clear out an existing credit line(s). The logic behind taking out this new credit line is to get better terms and conditions. In most cases, this is as it concerns interest rates.
However, there are other possible reasons for this. For example, it could be for the sake of consolidating multiple debts. This makes repayment easier as well as cheaper. Another possible reason for taking out a refinance loan is to make significant changes to pre-existing terms.
This could be to switch from a fixed rate to an adjustable rate or vice versa. Changing loan programs is equally a possibility with refinancing loans.
Can You Save Money by Taking Out a Refinance Loan?
It is possible to save a significant amount of money by taking out this credit line. This is as long as you are a right fit for this kind of credit line and you do a good job of agreeing to the best loan terms and conditions for you.
Its cost-saving effects mostly come from agreeing to lower effective interest rates. For example, an individual can get an effective interest rate of 25 percent on credit card cash advances. The rate can be as low as 10 percent with a refinance loan that is supposed to help repay the credit card debt.
In a situation where the sum of 200,000 Norwegian Kroner is borrowed over 5 years, a refinance loan can help save as much as 60,000 – 80,000 Norwegian Kroner. This is how much cost-saving it can get.
How Do You Get the Best Terms with a Refinance Loan?
Comparing lenders and working with a loan broker is high on the list of tips for getting the best refinance loans. By comparing lenders that offer refinansiere lån (Norwegian for refinancing loans), you will be able to choose the one that best suits your financial profile.
To this end, ensure that you are presented with as many options as possible. This implies that you should not just agree with the first offer that you come across. By the way, this credit line does not have to come from your previous lender(s).
Using the Services of a loan broker will equally help you get and explore as many lenders as possible. Furthermore, these brokers are usually able to negotiate for better terms and conditions. This is because of the close professional relationship they have with some of these lenders.
So, their clients may be able to get far better deals than they can get on their own. Additionally, other helpful tips include:
- Reading the entire fine print before agreeing to a deal – This is especially with those options that are presented as no-cost loans
- Choosing the right program – For example, would you be better off with a government-sponsored refinance loan or a conventional one?
- Choosing the right interest rate type – You need to choose between the fixed and adjustable rates based on your situation
- Improving your credit profile and financial status before applying
You should also use a comparison tool. For example, there are calculators on various online platforms that help compare lenders.
How Soon Do You Get Your Refinance Loan?
It can come in a few hours or at most 2 days if approved. The acceptance or decline response from the lender should come in a few minutes. The advantages of the internet and information technology at large make this possible. You can also fast-track things by using the services of a broker.
Can You Have a Co-Applicant?
You can apply with a co-applicant. This is even a very viable option for certain borrowers. For example, it can significantly improve the chances of a prospective borrower with less than impressive eligibility rating securing the loan.
This is because the credit profile of the co-applicant will be factored in. So, it would make much sense to apply with someone that fits the lender’s eligibility criteria very well.
By the way, some people consider refinancing as a way to let go of co-applicants. This is because a co-applicant remains liable until such measures are taken. So, you should bear this in mind before applying with a co-applicant or allowing yourself to be used as a co-applicant for someone else.
Are You Obligated to Receive a Refinance Loan Offer from a Lender?
You are not obligated to receive a refinance credit line from a creditor. This is why you should compare several options before making your choice as pointed out above.
However, you should know that multiple applications can affect your credit score. This is given how inquiries by prospective lenders about your credit state can have this effect. So, you need to be mindful of how many applications you send out.
Additionally, sending out multiple applications might make you appear desperate before some lenders. This is something that some creditors will take undue advantage of.
What Is a Refinance Loan’s Repayment Period?
There is no fixed timeframe for repaying this line of credit. It is dependent on the agreement between the borrower and the creditor. The repayment period ranges from short to long-term.
But going by usual occurrence, it is mostly between 1 – 2 decades. Borrowers that settle for shorter repayment plans are increasingly likely to secure low loan costs. However, repaying huge amounts can seem very inconvenient, and this is why this should be seriously thought about to avoid late repayment penalties.
Which Norwegian Lenders Offer Refinancing Loans?
Santander, YA Bank, Bank Norwegian, Complete Bank, Easybank, Centum, Zmarta, Sbanken, Lendo, and Axo Finance are among a long list of lenders that can be considered. The aforementioned lenders have particularly been listed because their average offers are well-recognized on several comparison platforms. So, you are very likely to find needed information about them to help you make the right choice.
More people in Norway, other European nations, and worldwide are exploring refinance loans. So, it is only normal that questions about these credit lines need answers. We have raised some of the frequently asked questions here and provided answers.
On the whole, the decision to take out this credit line should be rational. This is particularly because it is not ideal for everyone. So, you should only consider it if it is right for you. Additionally, those who take out this credit line have to manage it properly to avoid getting themselves into a financial crisis.