You should remember that refinancing a loan by using a security in form of a home is less expensive endeavor than considering unsecured loans. Therefore, if you own a home, you can take out a refinancing loan, which you can secure by a home, which will help your free up capital to make relevant purchases and pay off debt you currently have.

When living in Norway, the idea of borrowing with a home as a security means that you can get up to twenty million kroner, which is a high number compared with unsecured option. Remember that a mortgage loan is generally higher since you will use your home as a security. Unsecured option can go up to 600,000 NOK.

The best way to learn more about refinancing is by checking here for more information. We can differentiate a few ways of refinancing by using your household as a security, including:

• You can take out a new refinancing loan by securing a home, meaning you can use the money to repay other loans such as personal and payday loans with high-interest rates.
• At the same time, you can move a loan to another bank, meaning changing the mortgage by changing the terms and rates, which is known as refinancing in Norway.
• Another option includes taking a new loan that exist beside the mortgage you currently have. The purpose of refinancing can be getting a large capital to invest into home renovation, handling expensive debt, traveling, or dealing with emergency expenses.

The main distinction is whether you will take refinance with or without a collateral. Regarding secured option, you can get it by placing a mortgage on your home, vehicle, while you can also use a co-borrower or guarantor for the process.

Interest Rates for Secured Refinancing

You should know that each loan features effective and nominal interest rate. The nominal interest rate is the fee that you pay to borrow money from the bank. On the other hand, the effective interest rate includes the combination of fees you must handle throughout the process combined with the nominal rate.

The common fees include term, set-up and change fees, among others. Getting secured refinancing loan comes with low interest and better terms compared with unsecured options. At the same time, mortgages come with the most competitive interest rates on the market, while you can incorporate other debt within the loan which will feature similar rates.

Generally, the interest rates depend on a few factors including the individual assessment or credit check, policy rate as well as bank’s provisions and your home value.

1.  Importance of Credit Check for Interest Rate

The moment you decide to apply for a loan, a bank will conduct a credit check. As a result, they will make a thorough assessment on how your financial situation is and whether you can afford a specific loan or not.

The credit check will show your credit score. In case you have plenty of debt and low income, your score will be low. This will present to a bank that lending you a money is risky endeavor. On the other hand, having a good credit score can help you obtain better terms and rates, which means lower interest rates and higher amount.

Remember that refinancing a loan secured by a household or mortgage generally features lower interest rates than unsecured counterparts. However, they will still determine the percentage based on your credit score, policy rate, value of household and bank’s provisions.

2.  Bank Terms Affect the Interest Rates

You should know that each bank comes with specific set of policies that will have a general impact on the final percentage you will get. The essential policy rate depends on numerous factors, meaning banks have corresponding rate which will affect all users across Norway.

Therefore, the regulations you should read will affect the interest rates. The development depends on external factors such as overall economy, which is something you can analyze before making up your mind.

3.  Home Value

Since you will take the loan by using your household as a security, you should know that the bank must conduct a valid assessment and appraisal of your household, which will determine the amount you can take and interest rate as well.

As a result, they can offer you lower rates if your home’s value is higher than the amount you wish to take.

Types of Loans You Can Refinance by Using Home as a Security

The main idea is to take the relevant loan option secured by your household; however, you should determine whether you can obtain the best terms or not. For instance, student loans come with low interest rates, meaning it is not worthwhile to refinance them by using this type of loan.

However, it is beneficial to do it if you wish to refinance following loan options, including:

• Credit Card – In case you have plenty of debt due to high-interest credit cards, you will end up with severe financial problems. We recommend you to avoid entering the problematic period by clearing each card before the due. However, if you have overspent and the interest is accruing the balance, you must do something about it.
• Personal Loans – Generally, unsecured loans will come with significant interest rates, no matter whether you have a large credit score or not. Therefore, if you have a few consumer loans you must handle, the best course of action is to save money by refinancing them and placing your home as a collateral to reduce the expenses.
• Installment Plans – Numerous online stores feature installment plans, meaning you can get a specific offer without interest for a certain period, but you must repay the amount you took for purchasing something you wanted. However, after period ends, you will end up with accrued interest which will directly affect your financial wellbeing. You can repay the debt by using this refinancing.
• Car Loan – A car loans feature high interest rates, especially compared with mortgages and secured options. If you wish to reduce the expenses by refinancing this loan, you should choose home refinancing option, which will provide you a peace of mind.
• Mortgage – People choose to refinance their current mortgage deal with a new one with better interest rates and overall terms. If you have high credit score, you can apply for better interest rates or choose a different bank that comes with other benefits.

Requirements

If you wish to refinance by using a home as security or sikkerhet i bolig, you should meet a few requirements that will help you throughout the process. You must own a household and have a mortgage you can use for refinancing purposes. At the same time, you must undergo a new home appraisal which will determine the current equity and capital you can take over it.

It means your home should have higher value than the first time you bought it. At the same time, the bank requires from you to have at least fifteen percent in equity, while the entire debt cannot exceed five times your income, which is vital to remember.

The most important factor is to ensure you do not have payment remarks, because they are immediate dealbreakers for most lenders across Norway. That way, you can rest assured and choose the relevant bank that will offer you best rates and terms that will meet your needs. It is as simple as that.