Mortgage Refinancing: When It Pays Off

What refinancing is

Refinancing is a new loan you use to pay off your old mortgage. It is usually taken from another bank to get a lower rate, a smaller payment or a different currency. The apartment stays pledged; the new bank simply becomes the pledgee.

Don’t confuse this with the refinancing done by the National Mortgage Company: it provides partner banks with long-term funding by refinancing the loans they have issued. For the borrower, that is not a separate service but part of how the bank funds mortgages.

When it can pay off

• market rates are noticeably lower than in your contract;
• many years remain on the loan — early in the term, most of an annuity payment goes to interest;
• you have a floating rate linked to market indicators and want a fixed payment;
• your loan is in foreign currency while your income is in drams, and you want to remove the currency risk;
• your income and credit history have improved, and you can qualify for better terms.

What eats into the savings

A new loan comes with its own costs. According to the hartak.am portal (checked on 13 September 2026), for a mortgage the bank charges AMD 5,000 to review the application and from AMD 50,000 to disburse the loan, the valuation costs AMD 18,000–25,000, and there are Cadastre Committee fees and mandatory collateral insurance for the whole term.

Add any early repayment penalty at your old bank: the hartak.am guide notes that early repayment is possible but the contract may include a penalty. The exact terms are in your loan agreement.

The formula is simple: savings = what you would pay on the old loan until the end of the term, minus what you will pay on the new one, minus all switching costs. Compare total payments, not just the monthly amount: a smaller payment achieved through a longer term can end up costing more.

Tax refund and state programs

If you receive the mortgage income tax refund, be careful. Under the Tax Code, the right to the refund is tied to a loan for buying a new apartment from a developer or building a house, and to one mortgage agreement, and new loans for homes in Yerevan issued after 1 January 2025 get no refund at all. Before switching, ask the SRC in writing how refinancing would be treated in your case.

The same applies to subsidized programs — Affordable Housing for Young Families and support for families on the birth of a child: subsidies are tied to the program and the partner bank. Before moving to another bank, find out whether you would lose the subsidy.

What to do

1. Get a statement of your outstanding balance and repayment schedule from the bank.
2. Find the early repayment terms and penalties in your contract.
3. Ask two or three banks for offers and request the full list of fees.
4. Calculate the total payments on the old and new loans, including all costs.
5. If you receive a tax refund or subsidy, get a written answer from the SRC or the program operator.
6. Only then sign the new contract, and make sure the pledge is re-registered to the new bank.

Key points

• Refinancing is a new loan to pay off the old one, usually for a lower rate.
• Savings are measured by total payments minus switching costs.
• Costs include bank fees, valuation, Cadastre fees, insurance and a possible early repayment penalty.
• Your tax refund and subsidies may be affected — check in advance and in writing.
• Start by negotiating with your own bank.