Refinancing
Operation of replacing an existing mortgage with a new one under better conditions.
Full definition
Refinancing involves replacing an existing mortgage with a new one offering better conditions (lower rate, different term). In Belgium, two options exist: renegotiation with the same bank (no release or new registration fees) or buyout by another bank (release costs + new mortgage registration). External refinancing costs include: reinvestment indemnity (maximum 3 months' interest), mortgage release (EUR 700-1,500), new mortgage registration (~1% of the amount), and file fees. Refinancing is worthwhile when the rate difference is at least 0.5 to 1% and the outstanding balance is substantial. It is advisable to calculate the break-even point by comparing interest savings to total costs.
Related terms
Mortgage loan
Bank loan secured by a mortgage on the property.
Mortgage release
Notarial deed cancelling the mortgage registration after the loan is repaid.
Mortgage
Real security registered on a property guaranteeing the repayment of a loan.
Fixed rate
Interest rate that remains constant throughout the mortgage term.