Refinancing loans is only beneficial in the first two years.
This was stated by the candidate of economic sciences, associate professor of the department of state and municipal finances of the Plekhanov Russian University of Economics Meri Valishvili.
She explained that refinancing implies a reduction in the interest rate on loans or an increase in the loan term, writes Gazeta.Ru.
Valishvili also added that, firstly, this is only beneficial in the first two years, rather than in the later period.
Then, when the borrower has paid a large share of interest to the bank, refinancing will not be advisable.
Secondly, the economist added that refinancing is only profitable if the difference in interest rates is no more than two percent.
In addition, if interest rates on loans rise, refinancing terms will be less attractive.
Valishvili emphasized that refinancing does not mean cancellation of obligations.
The bank will write off the debt in the event of the debtor's bankruptcy and the absence of property to fulfill the obligations, but not due to refinancing.
Author: Elena Gutyro
