One way to achieve this may be by lowering the costs of your current loans and credit cards through refinancing. Here’s what you need to know to take advantage of this opportunity.
Reminder: what is refinancing?
Refinancing involves taking out a new loan to pay off existing obligations. The goal is to obtain better credit terms, such as lower interest rates, lower monthly payments, or a shorter debt repayment period, which altogether can lead to significant savings.
Why consider refinancing in Norway?
In Norway, the interest rates for mortgage and consumer loans can vary significantly depending on the bank and the current market situation. Refinancing allows you to take advantage of these differences and negotiate better terms. Expats living in Norway often can benefit from the services of financial advisors and consultants who can help navigate the entire process
How much can you save by refinancing?
Let’s analyze the example of our customer, Mr. Jack. He was repaying a personal loan:
- amounting to 100 000 NOK,
- borrowed for 5 years,
- at an interest rate of 15%,
- with a monthly installment of about 2 378 NOK.
He decided to take advantage of refinancing at another bank, which offered better terms, namely:
- the loan amount remained unchanged: 100 000 NOK,
- the repayment period was still 5 years,
- however, the interest rate was reduced to 10%,
- and the monthly installment decreased to about 2 100 NOK.
As a result, Mr. Jack reduced his monthly installment by 278 NOK, which translates to a yearly saving of 3 336 NOK. Lowering the interest rate while keeping the same repayment period allowed him to significantly reduce his monthly expenses without extending the debt period.
What are the benefits of refinancing?
There are many benefits to refinancing. Let's describe some of the most important ones.
- Lower payments
By securing a lower interest rate on the refinanced loan, monthly installments can be reduced, which directly impacts the improvement of the household budget. - Debt consolidation
Refinancing allows you to combine several different obligations into one loan with one, often lower, installment. - Changing the loan repayment period
You can shorten or extend the repayment time of the loan, adjusting it to your current financial needs.
What to consider when refinancing?
Refinancing costs: consider fees related to the early repayment of current obligations and fees for initiating a new loan.
Interest rate differences: compare the interest rates of your current and proposed loans, taking into account all costs.
Contract terms: pay attention to any clauses regarding, for example, the possibility of early repayment or changes to the contract terms.
How to refinance your debts?
Starting the refinancing process in Norway is relatively simple. It is advisable to begin by comparing offers from different banks and financial institutions. Many people use the services of credit consultants, who can help choose the offer perfectly suited to their needs.
Refinancing loans and credit cards can be a great way to optimize the household budget. It is worth considering this option to start saving again, especially in a country with a high standard of living like Norway.