Mortgage Refinancing: How to Make the Right Choice and Save Money

Mortgage refinancing is a way to ease your financial burden by taking out a new loan on better terms. If your current mortgage has a high interest rate, the monthly payment has become unmanageable, or you want to consolidate multiple debts into one — refinancing can be a smart financial strategy.

However, for refinancing to truly work in your favor, it’s crucial to choose the right bank, compare all terms, and calculate the total overpayment.

That’s where AFM comes in. The platform lets you compare mortgage refinancing offers from banks across Armenia using key criteria: interest rates, fees, loan terms, and borrower requirements.

A convenient mortgage calculator helps you estimate your monthly payment, breakeven period, and actual savings. AFM also regularly publishes updated bank conditions and expert tips to help you avoid common mistakes when applying for a new loan.

Use AFM as your reliable guide — bookmark the platform to quickly return to your calculations and find the most beneficial refinancing options or to compare bank terms in the “Mortgage” section.

What Is Mortgage Refinancing?

Refinancing means taking out a new mortgage to pay off your existing one. The goal is usually to:

1. Lower the interest rate
2. Reduce the monthly payment
3. Change the loan term
4. Switch currencies or change the type of interest rate (e.g., from floating to fixed)

When Does It Make Sense to Refinance?

Refinancing can be beneficial if:

1. Your current interest rate is higher than the market average
2. Your income has decreased, and the monthly payment is too high
3. You want to change the loan term — either shorten it (to save on interest) or extend it (to reduce the monthly payment)
4. You have multiple loans and want to combine them
5. Your current bank doesn’t offer flexible terms, but another one does and is ready to offer better conditions to attract new clients

Example: If you took a mortgage at 13% in 2022, and today another bank offers 9% under similar terms — you can refinance, pay off the old loan, and save millions of AMD over time.

When Is Refinancing Not Worth It?

Refinancing is often seen as a way to save money — but it’s not the right choice for everyone. In some cases, getting a new loan may actually increase your overall costs.

Before submitting an application, make sure that refinancing is truly cost-effective and not an extra financial burden.

You should avoid refinancing in these cases:

1. The new interest rate is less than 1–1.5 percentage points lower — the savings can be offset by fees for property valuation, insurance, early repayment penalties, and notary services
2. You have less than 2–3 years left on your current mortgage — by this time, you’ve likely already paid most of the interest, and a new loan would only increase your total costs
3. Your credit score has worsened — the bank may offer you a higher rate or stricter conditions
4. The new loan involves extra costs — mandatory insurance, high upfront fees, or hidden charges may cancel out the potential benefit

Before making a decision, calculate not only the monthly payment, but also the total cost of the loan — this is the only way to determine if refinancing will actually reduce your debt burden. You can calculate all payments and overpayment yourself using the mortgage calculator on AFM.

Example: When Is Mortgage Refinancing Worth It — and When It’s Not?

Let’s say in 2021 you bought a home for 22,000,000 AMD, made a 10% down payment of 2,200,000 AMD, and took out a mortgage of 19,800,000 AMD for 15 years at an interest rate of 13%.

Your original loan terms:

1. Monthly payment ≈ 250,500 AMD
2. Total interest overpayment over 15 years ≈ 25.3 million AMD

Now, four years later (in 2025), you’re considering refinancing the remaining balance for 11 more years at a new rate of 9% annually.

By this point — due to the annuity schedule — you’ve paid mostly interest, and the principal is still largely unpaid. The remaining debt, including accrued interest, is approximately 41.3 million AMD.

Terms after refinancing:

1. New monthly payment ≈ 494,200 AMD
2. Total interest overpayment on the new loan ≈ 23.9 million AMD

Important: With annuity-based loans, refinancing after 4 years means the remaining balance appears higher than expected, because you've already paid most of the interest, but not much of the principal. So despite a lower rate, the new total cost is nearly equal to the original — which reduces the benefit of refinancing.

Bottom line:

Refinancing in the early stages (1–2 years) can bring real savings. But after 4+ years, the potential benefit shrinks significantly — especially when you factor in bank fees, property revaluation, insurance, and notary costs.

Use the AFM mortgage calculator to get a precise estimate — don’t rely on interest rate alone.

Which Banks in Armenia Offer Mortgage Refinancing?

Here are some banks with dedicated refinancing programs:

Terms may vary depending on:

1. Purpose (e.g., paying off an existing loan or completing construction)
2. Collateral availability
3. Borrower income
4. Credit history

Required Documents for Mortgage Refinancing

To apply for refinancing, you’ll need a standard document package that banks use to assess your creditworthiness and existing loan details. Most often, you will need the following:

1. Passport or ID card
2. Main identification document proving citizenship and identity.
3. Current mortgage agreement
4. Shows the loan amount, interest rate, term, and terms of the original mortgage.
5. Payment schedule
6. Helps the bank calculate your remaining debt and understand the repayment stage.
7. Proof of income
8. Typically a letter from your employer (for the last 6 months) or tax filings if you’re self-employed. Required to confirm your ability to repay the new loan.
9. Property documents
10. Technical passport, ownership certificate, or preliminary purchase agreement (if the property isn’t fully registered). The property must be legally clean and eligible for refinancing.
11. Credit report
12. Retrieved from ACRA. The bank will check for late payments, open loans, and your overall debt level.

Additional documents may be requested by the bank, such as:

1. Insurance policy
2. Debt clearance certificate
3. Documents on additional collateral (if used)

The full list depends on the bank’s internal policies and the refinancing structure.

Alternative Options: What If Your Bank Doesn’t Offer Mortgage Refinancing?

Not all banks in Armenia openly advertise mortgage refinancing programs. But there are alternative solutions:

1. Take a Secured Consumer Loan Instead

If your bank doesn’t offer refinancing directly — but you’re a payroll client — you may still benefit from preferential loan terms such as:

1. Lower interest rates
2. Minimal fees
3. Simplified approval process

In this case, you can:

1. Apply for a secured loan (with real estate as collateral)
2. Use the funds to fully repay your existing mortgage early

Important: You are essentially replacing a mortgage with a consumer loan — even if it’s secured. Be sure to:

1. Match the loan term to the remaining mortgage term
2. Ensure the interest rate is not higher than your current one
3. Watch for hidden costs, like mandatory insurance policies

2. Refinancing with Alternative Collateral

If the property under your current mortgage isn’t yet in your name (e.g., you're buying in a new development), some banks may issue a loan secured by another property — such as:

1. A relative’s apartment
2. Another property you already own

This structure can also be used as a refinancing workaround.

Pro Tips for Getting Better Refinancing Terms

1. Your status as a payroll client can unlock lower interest rates. Ask your bank — even if they don’t offer refinancing by name, they may have flexible secured loans.
2. Compare not just the interest rate, but also total fees: for property valuation, notary services, and insurance.
3. Use the AFM calculator to accurately measure your savings.
4. Don’t settle for the first offer — AFM aggregates and compares all available loan products, including fees and real effective rates.

On our platform, you can also find a step-by-step guide on how to take out a mortgage wisely.

Key Things to Watch When Refinancing

Effective interest rate (APR) — or Annual Percentage Cost — reflects the true cost of the loan, including all related expenses.

That’s the number you should compare across banks — not just the nominal interest rate.

Conclusion: When Mortgage Refinancing Really Works for You

Mortgage refinancing isn’t just a new loan — it’s a full-fledged debt management tool.

If you took out a mortgage a few years ago at a high interest rate and now better offers are available on the market, refinancing can become a real opportunity to save money and reduce your monthly burden.

This is especially relevant if you want to change your repayment term or consolidate multiple loans into one.

However, refinancing isn’t always justified.

If you have less than 2–3 years remaining on your current loan, the rate difference is under 1–1.5 percentage points, and the process involves appraisal, insurance, and high fees, the actual benefit may be minimal. In such cases, the new loan could increase your total cost.

When Refinancing Is Truly Beneficial

1. Your current interest rate is at least 1.5 percentage points higher than the new offer
2. You are in the early repayment period (within 1–5 years of your mortgage)
3. You have a stable income and a good credit history
4. The new bank offers loyalty perks, such as benefits for payroll clients
5. You are willing to calculate the full cost, including all related fees

How AFM Can Help

AFM supports you at every step:

1. Compare bank offers for refinancing
2. Use the mortgage calculator to estimate your savings
3. Understand key fees and conditions that affect your deal
4. Explore alternative options, like secured consumer loans, if refinancing isn’t directly offered

With a smart approach, refinancing can help you save up to several million AMD — without adding strain to your budget.

Ready to Save on Your Mortgage?

1. Calculate your potential benefit using the AFM calculator
2. Compare interest rates and fees across banks
3. Get a curated list of offers tailored to your needs

Save this article and share it with those who already have a mortgage — it could help them make better financial decisions.

And you can read our article on how to buy an apartment in Yerevan with a mortgage on the best terms.

AFM is a simple, free, and risk-free tool to help you choose the best mortgage solution.