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Ever come across the term Mortgage Refinancing? In Indonesia’s property finance landscape, there are quite a few terms that might pop up, and refinancing is one of the most important to know. In essence, refinancing is a type of mortgage product that allows you to restructure your existing KPR instalments into a new repayment scheme—essentially, a fresh start for your ongoing home loan.
So, what exactly is mortgage refinancing, what types are available, what are the administrative costs involved, and how do you apply for it? Let’s Move Group is here to walk you through everything you need to know in this handy guide.
What is Mortgage Refinancing in Indonesia?
As the name suggests, Mortgage Refinancing (or KPR Refinancing) refers to the process of re-financing an existing home loan through a new one.
Think of it as patching one hole with another—but in a strategic and often helpful way. Refinancing can serve as a financial lifeline if you’re struggling to keep up with your current KPR repayments due to unforeseen financial setbacks.
Understanding KPR Refinancing
Mortgage refinancing is the process of applying for a new loan to pay off an existing KPR (home loan). The key goal? To secure more favourable loan terms—perhaps a lower interest rate, a longer repayment period, or even extra funds for other personal needs.
In simpler terms, refinancing allows homeowners to swap out their current mortgage scheme for one that’s better aligned with their present financial situation. Many borrowers opt for refinancing when interest rates drop or when they need to reduce their monthly payments to make them more manageable and sustainable.
Types of Mortgage Refinancing
Rate and Term Refinancing
This method involves replacing an existing mortgage with a new one that has a different interest rate or loan term, without borrowing any extra funds. The main goal is to secure a lower rate or to adjust the repayment period to better suit your financial situation.
Cash-in Refinancing
In this type of refinancing, the borrower injects additional funds to reduce the outstanding mortgage balance. This helps lower the loan-to-value (LTV) ratio, which in turn can qualify the borrower for a more favourable interest rate or reduce the monthly repayments.
Cash-out Refinancing
Cash-out refinancing allows you to tap into the increased value of your property by borrowing a larger amount than your existing mortgage. The extra funds can be used for a variety of purposes—renovating your home, funding education, or covering other financial needs.
Consolidation Refinancing
This option combines multiple existing loans into one new mortgage with a lower interest rate. The objective is to simplify repayments and reduce the overall cost of borrowing by cutting down on cumulative interest.
Top-up Refinancing
Similar to cash-out refinancing, top-up refinancing lets you borrow additional funds on top of your current KPR, usually provided the value of your property has increased. This extra money can be used for anything from home improvements to personal projects or investments.
4 Benefits of Refinancing Your Mortgage
1. Lower Monthly Repayments
By extending your loan term or securing a lower interest rate, your monthly mortgage payments can become lighter and more manageable. It eases your financial burden and gives you better breathing room.
2. Access to Lower Loan Interest Rates
Refinancing can open the door to more competitive rates compared to your original KPR, potentially saving you a significant amount in interest over the life of the loan.
3. Opportunity to Access Extra Funds
If your home has increased in value, refinancing allows you to take out additional funds against it. These funds can be used for renovations, investing, or fulfilling other financial goals without needing to apply for separate loans.
4. Greater Flexibility
For those juggling multiple loans or credit facilities, refinancing offers the opportunity to consolidate them into one structured repayment plan. It simplifies your finances and can lead to a more organised, stress-free approach to debt management.
Risks of Refinancing Your Mortgage
Refinancing your KPR can be a smart financial move—helping to manage monthly repayments or secure better interest rates. However, it’s important to understand the potential risks involved before making the leap. Here are some key factors you should carefully consider:
1. Additional Costs
Refinancing isn’t free. There are various fees to take into account—administration fees, property valuation (appraisal), notary charges, and more. These costs typically range from 0.5% to 3% of your total mortgage, and in some banks, may even reach up to 6%. It’s essential to calculate these expenses upfront to ensure the benefits of refinancing outweigh the additional outlay.
2. Early Repayment Penalties
If you’re paying off your original mortgage before its term ends, your bank might charge you a penalty for early repayment. This penalty can significantly reduce the savings you expect to make through refinancing. Always check the fine print and clarify early settlement terms with your current lender before moving forward.
3. Interest Rate Risks
One of the main goals of refinancing is to secure a lower interest rate. However, if you opt for a floating rate, there’s always the possibility of it rising in the future. This could lead to higher monthly repayments than what you’re currently paying. Be sure to understand the type of interest rate you're being offered, and choose one that suits your financial stability and risk appetite.
4. Changes in Financial Standing
Applying for a mortgage refinance means your financial status will be reassessed. If your income has dropped or your debt-to-income ratio has worsened, the bank may reject your refinancing application. It’s vital to ensure your financial situation remains stable—and meets the bank’s requirements—before you begin the process.
5. Liquidity Risk
If your current mortgage reaches maturity and you’re unable to secure refinancing in time, you could face serious liquidity issues. This could affect your ability to meet your repayment obligations, and in extreme cases, may lead to insolvency—even if your assets are worth more than your debts.
The House Refinancing Process: How to Apply for a Mortgage Refinance in Indonesia
Getting a mortgage refinance isn’t as complicated as it may seem—but it does require a clear understanding of each stage. Here’s a step-by-step look at how to go about it:
1. Contact Your Current Mortgage Provider
Start by reaching out to the bank that issued your original KPR. You can either visit the nearest branch or get in touch with their marketing or loan services team.
Once you’re connected, the bank will conduct a credit score check to determine your eligibility. If your credit rating meets their criteria, they’ll proceed with your refinancing request.
2. Prepare the Required Documents
Once you’ve passed the initial screening, you’ll need to gather and submit several important documents, including:
- Photocopy of applicant and spouse's ID card (if applicable)
- Photocopy of the Family Card (Kartu Keluarga - KK).
- Marriage/divorce/death certificate of spouse (if applicable)
- Photocopy of tax ID number of applicant
- Pay slip or income statement
- Photocopy of bank statements or savings account transactions for the last 6 months.
- Proof of property ownership—title deed (sertifikat) and building permit (IMB)
Make sure all your documents are complete and up to date to avoid any unnecessary delays.
3. Property Reappraisal
The bank will carry out a fresh valuation of the property you’re refinancing. Property values can change over time, so this appraisal is crucial in determining how much the bank is willing to lend you.
4. Issuance of the SP3K (Credit Approval Letter)
Once the property assessment is completed and your application is approved, the bank will issue an SP3K (Surat Penegasan Persetujuan Penyediaan Kredit). This letter outlines the approved loan amount, interest rate, loan term, and other terms and conditions. Be sure to read through the SP3K carefully and clarify any details before moving to the next stage.
5. Signing the Mortgage Agreement
The final step is signing the credit agreement (akad kredit), usually in the presence of a notary. This legally binding contract formalises your refinancing deal. After the agreement is signed, the refinancing funds will be disbursed according to the terms agreed with the bank.
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How to Make the Most of Your Mortgage Refinancing
To maximise the benefits and minimise the risks of refinancing your KPR, consider the following steps:
1. Prepare the Required Documents
Gather all necessary documents such as valid ID, payslips, financial statements, and property-related documents. Having complete and organised paperwork will help speed up the application process and increase your chances of approval.
2. Choose the Right Bank
Do your research and compare offers from various banks. Pay close attention to interest rates, additional fees, and the terms and conditions. The goal is to find the most suitable option that aligns with your financial goals.
3. Calculate the Refinancing Costs
Don’t forget to tally the total cost involved in the refinancing process. Then weigh it against the potential savings you’ll gain. Refinancing should offer a clear financial benefit—even after deducting all the associated fees.
4. Consider the Loan Tenure
Pick a loan term that matches your financial capacity and long-term goals. A longer tenure may reduce your monthly repayments but could end up increasing the total interest paid over time. It’s about finding the right balance.
5. Stay Disciplined with Your Repayments
Maintaining a good credit score and repayment history will strengthen your chances when applying for your next KPR. Make sure to follow your loan agreement and avoid missed payments—this will give you better leverage for future mortgage products.
Another KPR Option: Mortgage Take Over
Leading Home Loan Refinancing Programmes from Top Indonesian Banks
Here are some standout mortgage refinancing programmes offered by Indonesia’s most reputable banks:
KPR Refinancing BCA
Bank Central Asia (BCA) offers a KPR refinancing scheme that allows you to unlock additional funds using your existing property as collateral. The perks include competitive interest rates and flexible loan tenures. Once the fixed-rate period ends, your KPR will switch to a floating rate, reviewed every six months. Fixed interest rates available:
- 1-year fixed
- 2-year fixed
- 3-year fixed
- 5-year fixed
Once the fixed-rate period ends, your KPR will switch to a floating rate, reviewed every six months.
BCA Refinancing Simulation
To help you plan your repayments, BCA offers an online mortgage calculator on their official website. This tool allows you to estimate monthly instalments and adjust the loan amount or tenure to suit your financial needs.
Find Out More
Mandiri Mortgage Refinancing
Bank Mandiri presents the Mandiri KPR Multiguna (Refinancing) programme, designed to provide cash loans with longer tenures and lighter repayments. It’s ideal for homeowners looking to utilise their property's value for various financial needs—whether it's business capital, renovation, or other expenses.
Find Out More
CIMB Niaga Mortgage Refinancing
CIMB Niaga offers a refinancing and mortgage take-over programme with competitive interest rates. One of the highlights includes a 5.75% fixed rate for three years. This option is perfect if you wish to switch your mortgage from another bank to CIMB Niaga, thanks to its efficient processing and transparent costs.
Find Out More
OCBC NISP Mortgage Refinancing
OCBC NISP allows clients to refinance or transfer their existing KPR from another bank or apply for a new loan with their current property as collateral. This refinancing option is tailored to give financial flexibility with competitive rates and an easy application process.
Find Out More
Maybank Mortgage Refinancing
Maybank offers a refinancing facility that enables you to either obtain additional funds or transfer your KPR from another bank. With flexible loan tenures of up to 20 years and competitive rates, it’s designed to suit your financial planning and long-term goals.
Find Out More
FAQ: Common Questions About Mortgage Refinancing
How Long Does the Refinancing Process Take?
Refinancing a mortgage typically takes between one to three weeks, depending on how complete your documents are and the policies of the bank involved. Each bank has its own procedures and requirements, so ensuring all necessary documents are in order can help speed things up.
What’s the Difference Between a Take Over and Refinancing?
Although often thought to be the same, there are key differences between a take over and refinancing:
- Refinancing involves applying for a new mortgage to pay off your existing one—usually to benefit from lower interest rates or extend your loan term. This can be done with your current lender or a different bank.
- Take Over, on the other hand, means transferring your existing KPR from one bank to another to get more favourable terms—such as lower interest rates or additional loan facilities.
What Are the Latest KPR Fees for Bank Mandiri in 2025?
The fees and interest rates for Bank Mandiri mortgages in 2025 are subject to change, depending on the bank’s current policies. It’s best to contact Bank Mandiri directly or visit their official website to get the most up-to-date information.
Received a Mortgage Rejection Notice?
If your mortgage application has been rejected, consider taking the following steps:
- Understand the specific reason for the rejection from the bank.
- Improve your credit record or adjust your loan amount to better reflect your financial capacity.
- Reapply once the issues have been addressed.
When is the right time to Refinance?
You might want to consider refinancing your KPR when:
- Market interest rates have dropped significantly below your current mortgage rate.
- You need additional funds for other financial needs.
- You wish to change your loan term to better suit your current financial situation.
Be sure to take into account any fees or costs associated with refinancing before making a decision.
Can Foreign Nationals Refinance Their Mortgage in Indonesia?
Policies for offering KPR to foreign nationals (WNA) vary between banks. That said, many banks in Indonesia do provide mortgage options to foreigners, provided certain terms and conditions are met. It’s best for foreign nationals to consult directly with the bank in question to get detailed information on the requirements and procedures involved.
Apply for a KPR Refinance Today! Reach out to Lets Move Group for expert guidance on navigating the mortgage process in Indonesia.
Refinancing could be the right move to ease your monthly payments or to access extra funds for other priorities. With Lets Move Group by your side, the process becomes more straightforward, efficient, and tailored to your goals.
We’ll help you get a clear understanding of your options and provide hands-on support in securing the best interest rates for your financial situation.
