Mortgage refinancing: rules and costs

Mortgage refinancing means moving your mortgage to another bank on better terms. Most often it is about lowering the margin, interest rate or total cost. It is a new loan agreement, so the bank reassesses creditworthiness and the property value.

For a quick comparison of instalments and total costs, use the Mortgage comparison calculator.

Start by comparing offers and the total cost. Useful tools include the Loan calculator and the Mortgage calculator.

When refinancing makes sense

Refinancing is worthwhile when the savings exceed the transfer costs. This usually applies when:

• interest rates or margins have fallen,
• your creditworthiness has improved,
• the original loan was taken on worse terms,
• there are many years left to repay.

The longer the remaining term, the higher the potential savings. If only a few instalments remain, the fees can absorb the benefit.

Costs to include

Typical refinancing costs include:

• new loan origination fee,
• property valuation,
• insurance required by the new bank,
• court and notary fees (e.g. land‑register entries),
• possible early repayment fee in the old bank.

That is why it is crucial to compare total cost, not just the monthly instalment. Helpful context: How APRC works — rules, limits and examples.

How the process looks

See also: Mortgage interest rate and Mortgage overpayment.

A typical process includes:

• initial offer comparison and credit assessment,
• documents and application,
• property valuation,
• credit decision,
• repayment of the old loan and disbursement of the new one.

The new bank repays the old mortgage usually directly, and you start servicing the new agreement. In practice, keep an eye on timelines to avoid gaps or double payments.

Is it always worth it

Not always. If the difference is small and the one‑off costs are high, refinancing may not pay off. Benefits are usually larger when:

• the instalment drops noticeably,
• the margin is materially lower,
• many years are left to repay.

Before deciding, calculate the full‑term impact. It also helps to understand how instalments are structured: Mortgage instalment — how to calculate and Fixed or decreasing instalment.

Refinancing vs renegotiation

Before moving the loan, try renegotiating terms with your current bank. In some cases the margin or rate can be lowered without a full refinancing process.

Documents needed for refinancing

You usually need: income documents, repayment history, property documents and a current valuation. The bank must confirm creditworthiness and collateral value.

Risks and pitfalls

Watch for one‑off costs that can erase savings. Also check whether you lose favorable terms from the old contract (for example cheaper insurance).

When refinancing does not make sense

Refinancing is usually not worth it when only a few years remain and transfer costs are high. In that case, overpayment or renegotiation with the current bank may be better.

How to calculate profitability

Compare the total cost of the current loan with the new offer, including all transfer fees. If savings are small, the risk and effort may not be justified.

Fixed rate and refinancing

If you have a fixed rate, check when the fixed period ends and whether early repayment fees apply. Refinancing often makes most sense right after the fixed‑rate period ends.

Timing and organization

Refinancing can take several weeks, so plan ahead. Make sure documents are complete and the schedule avoids any gap in servicing the loan.

Creditworthiness after refinancing

The new bank recalculates affordability, so changes in income or liabilities can affect the decision. Check in advance whether your current situation meets requirements.

Insurance and extra costs

A new offer may have a lower margin but more expensive insurance. Compare the total cost of all components, because they determine real profitability.

Check fees in the current bank

Before switching, confirm early repayment fees and any closing costs in the current bank.

Refinancing checklist

Before signing, check:

• the total remaining cost of the current loan versus the new total cost with all fees,
• whether an early repayment fee still applies and when it expires,
• required add‑on products and their full‑term cost,
• the valuation price and who pays for it,
• the timeline so you avoid overlapping instalments.

What can slow the process

Missing documents, an unclear legal status in the land register, or delays in property valuation can extend the process. If the property is under construction, disbursement schedules and confirmations may add more steps. Plan for several weeks and keep all documents up to date to avoid gaps.

See also: What a mortgage is and how it works and Mortgage comparison.