Why would a bank offer refinancing at a lower interest? Is any money saved at all, or is it just paid on a different timeline?
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A mortgage is just a special type of loan. It’s a loan where your house is the collateral if you default. That’s it. So in most ways its a lot like other loans.
The bank would prefer that you don’t pay it off early, but it’s also not a big deal to them if you do. So if you suddenly come into some money, you can pay off all your debts.
Well what if another bank wants your business? They can offer to pay off the remainder of your mortgage and then you owe the new bank money instead of the old bank. Now the new bank is making money off your mortgage. If they offer a lower interest rate, then that’s great for you. You save more money, the new bank is making money that they weren’t before, and the old bank got their money back and can now flip it into a new mortgage. The only loser is the old bank, but even then, not a huge loss.
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