Forward funding or forward mortgage is a mortgage without a property selected. The bank approves you in advance and you then have a contractually given time to choose a property. Forward mortgage refinancing works in a similar way, where you agree with the bank to refinance your mortgage several years in advance.
What is forward refinancing?
Mortgage interest rates are constantly changing, those interested in a new home must prepare for higher repayments, as well as those who will be refinancing an existing mortgage in the near future. Most of us are dealing with this just a few months before the end of the fixing period.
But did you know that some banks allow forward refinancing, where you can agree new terms with the bank for refinancing your mortgage even several years before the fixation period expires? The new mortgage will then be taken out only when the fixation period of the existing mortgage expires.
When is the ideal time to refinance?
Start looking into refinancing options when mortgage interest rates start to rise significantly. Most banks can deal with refinancing 1-2 years in advance, the exception being Komerční banka (up to three years in advance) and mBank (only 8 months in advance).