It is said that money rules the world. There are songs to that effect and even if you do not agree with the phrase, it is quite a catchy one-liner. However, it has to be admitted that money heavily impacts our world; from the economy of countries and businesses to the financial situation of an individual.
Everyone borrows too, from countries to individuals when there is the need to finance a project or to meet up with an obligation. However, the world of finance being tricky, many individuals do not really know how to navigate through it neither do they understand the options available to them. Therefore, certain concepts like refinansiering as the Norwegians call it and the opportunities that it holds has to be explained.
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What Does Refinansiering Mean?
This is the word for refinancing in the Norse language which basically has to do with revisiting an already existing financial agreement with the intention of modifying or altering certain terms in the agreement. Note that this process is not an attempt at terminating a financial agreement rather, it is engaged in by people who want to extend an already existing agreement while making the terms more favorable to the parties involved. You can read more about it here.
Refinancing is mostly done in a loan or mortgage agreement and refinancing the loan agreement is usually more for the benefit of the borrower. This being the case, it is important to look at this two set of agreements.
What Is A Loan?
This is primarily a contract that is between a borrower and a lender. It is a binding agreement and the terms of this agreement is what regulates the contract and the breach of any of these terms can repudiate the agreement and make the one in breach liable. There are various types of loans namely
- Syndicated loans
- Bilateral loans
- Term loans and
- Revolving loans
Mortgages
This is an agreement quite similar to loan agreements. As a matter of fact, it is even referred to as a secured loan. It is a loan agreement in which the lender takes as security for the borrowed sum interest in real property belonging to the borrower until the borrower has fulfilled the terms of the agreement. The borrower is usually referred to in law as the mortgagor and the lender is known as the mortgagee.
Why Refinance?
Notice from the above set of agreements that the one thing they have in common is that there is an agreement between a borrower and a lender and that there are terms in the agreement that must be abided by. There are many eventualities that might occur that may lead to either of the parties (mostly the borrower though) to want a renegotiation of the terms of their agreement to one that is more favorable. The following are reasons why people and even organizations do it:
To Save Money
No matter how rich an individual or even an organization is, if there are cost effective measures that can be adopted by the individual, then you best believe that such a person will definitely take the offer. One of the ways that refinancing helps one save money is that you might be able to get a newer arrangement with low interest rates.
Debt Consolidation
This is another advantage to be gained from refinancing as you can now streamline your debts into one as against owing several debts with various interest rates. Again, when there is a debt consolidation, it has the advantage of lowering your various debt interests into one low debt interest.
You Get A Better Rate
The basic benefit that one gains from refinancing is the ability to renegotiate financial rates. When this is done, one most often gets a better rate than before the refinancing. One thing that this can help the individual do is to pay off the loan or mortgage much quicker or earlier than previously envisaged.
Equity To Fund Your Projects
Another advantage to refinancing is that it can be used to free up the equity you have in your real estate properties (the home for most individuals in the country). With the freed up equity, you can now invest in certain projects or even make investments that can be financially rewarding for you. Organizations often use this to free up some much needed equity. You may need an expert in these areas in order to benefit from this.
Conditions For Refinancing In Norway
The conditions for refinansiering (refinancing) in Norway are actually defined by the various financial institutions (banks). This is because they are the ones that give out the loans and the mortgage agreements which you have to first get before you can even talk of refinancing and this is quite different from what is obtainable in various other countries. Therefore, it is important to do a bit of a survey so as to understand what may be in the offer by each bank.
Again, not everyone might be a finance expert or in this particular instance, a loan expert. You will therefore need to engage an expert so as to know your options better.
Generally, you should be acquainted with the general conditions that have to be met to get a loan in Norway. One thing that is taken very seriously and can determine whether you are given the loan or not is your credit worthiness. If the banks decide that you are credit worthy (and your records will be there to prove that).
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The very first step then is to apply for the loan wherein a document will be given you to fill on the spot and immediately return. However, before you apply, you need to have the following:
- Have to be registered in Norway
- Have a permanent personal number
- To be at least 23 years of age
- You should also earn an annual income that is at least NOK220,000
Conclusion
Issues of finance are always tricky and need to be understood before one gets involved. However, we really cannot do much without finance and for this reason people take out loans and mortgages in other to have that house or invest in a project.
However, with refinancing, one can improve one’s terms and conditions in an agreement to a more favorable one. This gives relief to the borrower and allows the person to pursue other projects.