Refinance Vs Retention, which one has a lower interest rate?

Normally, after three years of installment, interest rates will rise. Therefore, we should go to the bank for refinance or retention to lower interest rates. Have you ever wondered what is the difference between refinance and retention and which one is better? ACU PAY will wrap it up for you guys.

What is Refinance?

Refinance is a request for a reduction in interest rates on condominiums and houses when you have paid the installment for 3 years. You need to apply with new banks or financial institutions to obtain lower interest rates and lower monthly installments.


Pros of Refinance

  • Get a low-interest rate
  • Can compare interest rates at low rates with many banks.

Cons of Refinance

  • All loan application documents must be submitted again.
  • There are fees to pay, such as

– New Contract Loan Management 0-3%

– A mortgage fee of 1%

– The stamp duty is 0.05%.

– Collateral assessment fee 0.25-2%

– Fire Insurance

  • Have a period of approval

The process of submitting a matter

Contact the bank that you want to refinance with and ask for a statement payment, prepare documents that are the same as a home loan, and submit documents, but check the terms of the loan first. Some banks may have to wait for three years, some maybe six to seven years.

What is Retention?

Retention is a negotiation with banks or financial institutions that have previously been involved in loans for loan interest reduction after you have paid installments for 3 years. This can only be done if you are a good debtor, have a credit history of on-time payment, and have never joined the State assistance measures program. It is also an alternative to save money on bank loan interest.

Pros of Retention

  • No need to file a document again. 
  • There is no need for a new mortgage, insurance, or credit checks fee and you can do this again in the next three years. However, some banks may charge 1-2% of the existing loan amount or the remaining amount.
  • The approval period is fast

Cons of retentin

  • Can’t cut the installment amount, just cut the interest rate. 
  • Interest rates have not been cut much. The interest rate will be as specified by the Bank.

The process of submitting a matter

Only documents, loan agreement, registration, and copy of our ID card. The period of consideration is not long because the bank already has a history of repayments. If you have already applied for a retention, you have to wait at least 3 years depending on the bank before re-application.

Refinance Vs Retention, which one has a lower interest rate?

For comparison, you need to see what kind of purpose you want. If you want the convenience of loan interest rate cuts, such as not having to waste time documenting, a little amount of spending, and a short period of time, choose “retention”, but if you want to reduce interest rates, pay less or install the same amount as before, choose “refinance” No matter which one you choose, you should choose the lowest interest rate conditions. You can compare the interest rate of a retention before refinancing with a bank.

In the end, whether you choose refinancing or retention, the main objective is to repay your house installment each month with a reduced amount of money. It is recommended that you make sure it is the most cost-effective method and choose the right bank to meet your terms and conditions.

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