Calculate expenses before doing “Refinance”

People who pay for house or car installment might be familiar with Refinance. For those who have never heard about refinance and are still considering refinance should not miss this article. Refinance is to loan a sum of money with different pay conditions and interest rates. We will talk about what refinance is, how good it is and which kind of refinance is better.

What is Refinance?

Refinance is a loan from a bank or financial institution to close the installment amount of our previous loan. Normally, refinancing has better loan conditions than the previous one such as lower interest rate and lower principal.

The pros of refinance

Lower interest rate
Higher limit of loan which will result in more money to use in other necessary parts.
Lower amount of installment in every month

The cons of refinance

There are operating expenses or fees in case of early redemption.
Increases in paying installment time

For those who are paying for car or house installment for some time and have an idea to refinance in order to have more money or to pay off the previous loan, ACU will show you about the expenses when you refinance.

Mortgage fee: There is a 1% fee for house refinance
A valuation of property fee: Usually there is a 0.25%-2% fee for A valuation of property
Early redemption fine: It is necessary to check the original loan contract time period before refinance. Most of the loan contracts are for 3 years.
Revenue stamp fee: There is 0.05%fee of the new loan for every bank
A loan fee: Consult with the refinance institute because some banks do not levy this fee.
Fire insurance: Anyone who wants to refinance their home needs to pay a different fire insurance fee according to the terms of each bank.

Example of calculating the refinancing in the case of home refinancing

The value of the house is 300,000 baht. A valuation of property fee 3,500 baht + Revenue stamp fee 1,500 baht + Mortgage fee 30,000 baht = 35,00 in total. Incase of fire insurance fee and a loan fee are not included because it depends on the conditions of the bank or money institute.