Is it worthwhile reviewing a mortgage?

You have no doubt heard from all sides that mortgage interest rates are very low. That is why you may be considering reviewing your mortgage. A good idea! However, bear in mind that refinancing entails additional costs. You will need to ensure that the lower rate offsets these new costs.

What costs are involved?

The costs associated with reviewing your mortgage will differ depending on whether you choose to do so with your current bank or another institution.
If you refinance with your current bank:

• You will have to pay an early repayment indemnity equivalent to a maximum of three months’ interest
• You will incur notary fees for taking out a new mortgage
• The bank will charge you an administration fee (usually around 600€)
• In some cases, there will be additional costs for outstanding balance insurance.

If you refinance with another bank:

• You will also have to pay notary fees, but this time for discharging the mortgage with your former bank
• In addition to the notary fees for taking out a new mortgage, you will have to pay the mortgage registration duties
• Once again, there will be an administration fee charged by the new bank
• If the new bank requires it, you will have to pay valuation fees.
  
  You now know all the costs associated with both options, enabling you to carry out your market research.
  Bear in mind that your current bank will often offer you a new interest rate that is less favourable than that offered by a new bank, but it will probably remain more attractive because of the costs involved in changing financial institutions.

Who is it for?

Reviewing a mortgage is, of course, not intended for people who have taken out a variable-rate mortgage, but rather for those who opted for a fixed rate.
This option may be worthwhile if your initial interest rate is at least 1% higher than the rate currently being offered. If the difference is less than 1%, you can also consider it if your mortgage still has at least 20 years to run.

Is this the only option?

No! Instead of replacing your existing mortgage, you can refinance it by making an early repayment of part or all of the outstanding amount.
This option is worthwhile if you have a substantial amount of money in your savings account because, in any case, because, in any case, it no longer allows your money to grow.
However, remember that any change entails costs and that you will owe the bank an indemnity equivalent to three months’ interest on the amount you repay early.