How does Refinancing (Refinansiering) Work Abroad?
Refinancing can be an important option to consider at many points in your life, whether it concerns your own home or a specific personal loan that you might have taken out. Revising some details of your loan or agreement can make a huge difference if you encounter financial issues or simply want to take some of the pressure off.
However, refinancing can also be a very specific and precise process that involves a lot of moving parts, something that can make it seem intimidating to actually tackle. For many people, even the idea of approaching a lender to change the terms of a loan can be scary, even if it would really help them financially.
If you’re refinancing something abroad, then this can seem even more tricky. But how does refinancing work abroad, and how tricky can it actually be to refinance something when more than one country is involved?
How to Approach Refinancing
The most important part of any refinancing attempt is actually approaching your bank or lender to arrange it. No matter what kind of adjustments you want to make to the existing arrangement, you need to actually voice them and get them officially made by the entity that you borrowed money from.
But how do you tackle it, especially if other countries are involved?
Slow Down
Always take your time to explore the many refinancing options that you have available, even if you know that some of them aren’t going to suit your needs. Looking at different advertised rates and comparing different refinancing plans can make it much easier to track down options that work for you.
For example, you might be able to compare multiple refinancing plans that all have slightly different minimum monthly limits or repayment times. Even if they all look very similar on paper, you can still compare them to get an idea of which one is the most convenient for your needs, then choose that one specifically.
It’s important to not rush yourself when focusing on refinancing a mortgage or loan, since you could make a costly mistake or end up pushing your finances a bit too far. Slow down, shop around, and give yourself time to consider every option before making a decision.
Talk Things Through
Many people who refinance important loans or mortgages will focus too much on a single aspect, such as the interest rate. While this can be very important, it isn’t the only thing that you should consider, especially when you’re trying to find the perfect refinancing option for your current financial situation.
Make sure to ask your lender about any important details that they might have missed or anything that you’re concerned about. The more you know, the better.
How Does Refinancing Work Abroad?
Refinancing can be a tricky situation when it involves handling property abroad since it really depends on exactly how the loan, mortgage, or other payment was originally set up. There can be a lot of fiddly details involved in refinancing something abroad, and not all of them are immediately obvious to people that haven’t needed to take out many loans before.
How Do the Loans Work?
The most important thing to remember is where the loan actually came from. It’s entirely possible to take out a loan in your home country and use it to purchase something abroad, but the loan will always be tied to the country (and lender) that you took it from.
This means that a loan from your local bank would still be related to your local bank, even if you’re using it to pay for something on the other side of the world. You can’t typically transfer loans from one lender to another, so you still need to stay in contact with the original lender – something that can be quite easy to do as long as you have internet access or a phone.
Online banking apps make this much easier, allowing you to get loans quickly without needing to make any physical visits. Really, any online source of loans can be convenient here, as long as you trust the site or group itself because you can access them at almost any time with minimal effort.
Can You Get a Mortgage Overseas?
In most cases, it’s possible to get an overseas mortgage – a mortgage for a property that isn’t in your home country. This is mostly used for holiday homes and retirement properties, but it can also be an option for people that want to have an established home in the country they’re moving to.
Whatever the reason you’re doing it for, it’s usually possible, although not always through the most convenient means. In some cases, you’ll be able to get overseas mortgages, lending the money from the first country to pay off a house in the second – but this is usually only possible with international lenders.
In some other cases, you will need to get a loan from the new country instead of your home country. For example, if you’re moving to Norway to purchase or lease a house there, then you might have to rely on local refinansiering (refinancing) sources to stave off kredittkortgjeld (credit card debt).
Do the Countries Matter?
Different countries have their own rules about how loans and financing can work, but there’s one advantage that you usually have when loaning internationally – your loan isn’t always affected by these laws. It all depends on how the loan itself has been set up and recorded.
If your loan is from Country A, then that loan tens to be contained within Country A at all times. The money stays in a Country A bank, in a Country A account, and doesn’t pass through any Country B banks or financial channels if you’re just withdrawing the money normally.
This means that you’re technically not engaging with anything in Country B besides the property you’re trying to mortgage or the purchase you’re paying for. However, these don’t usually require much more than the money, so you can avoid any direct interactions with Country B banks.
Are Dedicated Overseas Mortgage Options Worth It?
Some lenders are explicitly market overseas mortgage options. These can be a valid choice since their mortgages are specifically designed for people who are trying to mortgage a home or pay off a debt in another country. However, they can also have some limitations.
For example, they might not provide as much protection for loss of money due to poor advice, and they can sometimes suffer from issues with exchange rates depending on which currencies you loan with. On the other hand, they can sometimes be a valuable asset to have, especially if you’re hit with unexpected payment problems.
Deposits also tend to be higher when using these methods since it becomes riskier for the lender. If you aren’t in the country, then there’s always a chance that you’ll simply not pay them, which can lead to major issues further down the line for both parties.
Why Not Use Local Banks?
Using local lending options is one of the most reliable ways to get a loan that you can rely on, but there are some issues with that. For example, if you don’t have any kind of standing or credit in the country, then it becomes very hard to get some of the better loans.
In order to build up to get the more impressive or larger-scale loans, you often have to either be a citizen of the country, or spend enough time there to have accounts with banks there. This isn’t a problem if you’re planning to move there, but it can be an issue for short stays or business trips.
Even so, local banks can be a very reliable place to turn, especially if you don’t have many other options. Just remember that they will often use a different currency and that their loaning and lending laws might be distinctly different from the ones that you’re used to back home.
What’s the Best Option?
There isn’t a single best way to tackle refinancing in any situation, especially not one as specific but unpredictable as refinancing between countries. Even if you just need something simple, it can take quite a while to pin down the exact option that would work best for you.
It’s a good idea to take things slowly, think about what you need most, and work out the exact kind of loan or mortgage options you might want. The more you prepare, the easier it becomes to find an option that will work for your exact needs, rather than having to work around a sub-par loan that doesn’t work well in your situation.
Whether you’re lending money to pay off something in your own country or to mortgage a house abroad, don’t rush ahead and try to compare every detail you can. Good loans can be hard to find, but once you know what to look for, it only takes a little more time and effort to find the right offerings for your financial requirements.
