Mortgage Refinancing – A Way to Lower Your Monthly Payments and Save Money

Mortgage refinancing involves taking out a new mortgage with another bank to repay your existing loan. The aim may be to secure a more favourable interest rate, reduce your monthly payments, or shorten the repayment period. However, it is important to remember that a lower monthly payment does not always mean overall savings. Additional fees, the remaining repayment period, and the total cost of the new financing also matter.

What does the refinancing process involve? Below, we explain each step.

1. Reviewing Your Current Mortgage

The first step is for the mortgage expert and the client to review the terms of the existing mortgage. Particular attention is paid to:

• the current interest rate and the bank’s margin,

• the remaining repayment period,

• the outstanding loan balance,

• additional costs, such as insurance and commissions,

• any fees associated with early repayment.

The aim of this stage is to determine whether refinancing could bring the client tangible financial benefits.

2. Comparing Offers from Other Banks

The next step is to analyse the available mortgage refinancing offers. We compare not only interest rates but also other financing terms, including:

• the interest rate and the bank’s margin,

• APRC (Annual Percentage Rate of Charge),

• the commission charged for granting the loan,

• any additional products or security requirements,

• extra costs, such as property valuation fees or insurance.

It is important to assess the total cost of the new mortgage and compare it with the cost of keeping the existing loan. This helps determine whether switching banks would actually be worthwhile.

3. Preliminary Creditworthiness Assessment and Refinancing Options

Before submitting an application, it is worth checking whether the client’s creditworthiness is sufficient to obtain financing from another bank. The mortgage expert reviews, among other things:

• the amount and stability of the client’s income,

• existing financial commitments,

• the client’s credit history with BIK (the Polish Credit Information Bureau),

• other factors affecting the assessment of creditworthiness.

This preliminary assessment helps determine the client’s chances of obtaining a refinancing loan and identify offers that best suit their financial situation. The final decision, however, rests with the bank and is made after a full assessment of the application.

4. Submitting a Mortgage Refinancing Application

Once the client’s creditworthiness has been assessed and a suitable offer selected, we prepare and submit the refinancing application to the new bank.

Depending on the bank and the client’s circumstances, the required documents may include:

• proof of income, such as an employer’s certificate confirming salary and bank statements or confirmations of salary payments into the client’s account,

• the current mortgage agreement,

• the current repayment schedule,

• property documents, such as the notarial deed confirming ownership,

• an identity document,

• any additional documents required by the bank.

The exact list depends on the offer selected and the borrower’s individual circumstances.

5. Credit Decision and Signing the Agreement

Once the bank has issued a positive credit decision, the next stage is signing the agreement with the new bank. Additional formalities may also be required, such as:

• reviewing the final terms of the agreement,

• signing the mortgage agreement,

• signing declarations related to establishing the new mortgage, including having a signature notarised if required,

• meeting the conditions for releasing the funds, such as opening a personal account or using other banking products.

The required formalities and associated costs depend on the bank’s requirements and the documents needed in each individual case.

6. Obtaining Bank Certificates and Releasing the Funds

Before the new bank can repay the existing mortgage, it needs up-to-date information from the bank currently servicing the loan.

At this stage:

• a certificate confirming the outstanding balance and the conditions for full repayment is obtained from the current bank,

• the new bank releases the refinancing funds once all required conditions have been met,

• the funds from the new mortgage are used to repay the existing loan with the previous bank.

The amount allocated to repayment must correspond to the outstanding balance confirmed by the current bank.

7. Repaying the Existing Mortgage and Closing the Loan

Once the funds have been transferred, the previous bank settles the mortgage. The borrower then needs to obtain a document confirming that the loan has been fully repaid, along with the documents required to remove the existing mortgage entry from the land and mortgage register.

Depending on the circumstances, additional formalities and fees related to settling the previous loan may also apply.

8. Updating the Land and Mortgage Register

The next stage is to update the mortgage entries in the property’s land and mortgage register. This involves submitting the relevant applications to:

• remove the mortgage registered in favour of the previous bank,

• register the new mortgage in favour of the bank providing the refinancing loan.

The entries must comply with the new bank’s requirements, particularly regarding the security for the loan. Applications are submitted to the competent land and mortgage register court.

As a general rule, court fees include PLN 100 for removing one mortgage and PLN 200 for registering a new mortgage. The fees in a particular case may depend on the scope of the applications being submitted.

9. Starting Repayments on the New Mortgage

Once the refinancing loan has been released and the previous mortgage repaid, the client begins making repayments according to the new repayment schedule and the terms agreed with the new bank.

At this point, the new financing terms come into effect.

Is Mortgage Refinancing Worth It?

Mortgage refinancing can be a way to reduce borrowing costs or secure more favourable repayment terms. However, it is not necessarily the best solution in every situation. Before making a decision, it is important to consider not only the monthly payment but also the costs of transferring the mortgage, the remaining repayment period, and the total amount payable.

You don’t have to analyse every offer and deal with all the formalities on your own. A mortgage expert can help you review your current mortgage terms, compare the available options, and guide you through the refinancing process.

Would you like to find out whether you could pay less for your mortgage? Get in touch with us. We will review your situation and assess whether refinancing could be a beneficial solution for you.