If you have taken out a mortgage at a much higher rate than those currently charged by banks, it is time to consider buying a mortgage. The goal is to obtain a significant reduction in your monthly payments in order to allow you to rebalance your budget and find a reasonable debt ratio.
Do you want to finance a new project, however, are you already repaying current loans such as your car loan or your revolving loan?
Consolidate loans with optional insurance but recommended for the repurchase of credit.
Real estate CREDIT buyback: Reduce your monthly payments!
The repurchase of mortgage is intended only for owners of a property and consists in contracting a new loan at a more advantageous rate in a competing bank to repay the current one.
The repurchase of mortgage loans thus allows you, while keeping the same duration of your personal loan, to significantly reduce your maturities, especially when the remaining duration is still important (more than 10 years).
As an “Intermediary in Bank Operations”, the mortgage repurchase broker , renegotiates quickly and in complete confidentiality with the largest French banks. It guarantees you to buy back your current credits under the best borrowing conditions ( loan in fine , loan work , ...). Thanks to this solution, your monthly payment will be reduced and you will find a budget adapted to your situation. You find real purchasing power and greater savings capacity. Loan renegotiation also allows you to reduce the term of your credit as much as possible to save on the total cost of loan interest.
When to renegotiate my Real Estate CREDIT Buyback?
For the repurchase of your mortgage to be really interesting, it is necessary that the difference between the total amount of your current loan offer minus the cost of the new loan can cover the costs of lifting the mortgage , as well as significant penalties of early loan repayment. These are often flat-rate and correspond on average to 6 months of interest (without however generally exceeding a maximum of 3% of the outstanding capital).
It is also necessary to count the costs of setting up a new guarantee as well as the time spent establishing the administrative procedures and the account transfer costs.
In principle, for your operation to be profitable, you must not be in the first years of your reimbursement, because the 3% ceiling then represents a very large sum and does not play a moderating role.
In recent years, the profit made on the remaining interest has proved insufficient in view of the costs incurred by the renegotiation of a mortgage. Ideally, it is best if your current credit is halfway, and the difference between the current mortgage rate and the new mortgage rate is at least 1%.
When buying a loan, also renegotiate your borrower insurance!
Thanks to the Lagarde Law and the Hamon Law, you now have the possibility to take out loan insurance other than that offered by the lender. The borrower, depending on his profile, can lower his cost of insurance and add a potential gain of several thousand us dollars over the period.
So accentuate the negotiation on borrower insurance , an item which represents about 10% of the total cost of a loan. The bank no longer has the right to impose on its client the collective insurance contract that it markets, provided that the contract offered by delegation has the same guarantees as the group contract. Labougeotte offers loan insurance that can allow you to save up to 60%, with equivalent guarantees thanks to rates adapted to customer profiles.
Example of mortgage repurchase
Example of a couple who borrowed 250,000 us dollars in 2012 at a rate of 3.80% over 20 years and who wishes to buy back a mortgage today (2020).
- We keep the remaining duration which implies a reduction in the monthly payment
2. We keep the initial monthly payment with a reduction in the duration of the loan.
|2012||Redemption February 2017|
|Amount of the loan||250,000 us dollars||205 300 us dollars|
|term of the loan||20 years||15 years|
|Monthly payment||14 88.73 us dollars||1 224 us dollars|
|Cost of interest||107,295 us dollars and 80,235 us dollars remaining in 2015||15 056 us dollars|
|Savings made||14 88.73 us dollars||28 328 us dollars|
We notice that in both cases, with a lower interest rate and despite the penalties, the total cost of credit is reduced. If the couple takes out their new loan in another bank, the cost of the new guarantee will have to be added.
You will understand, the renegotiation of credit can be very advantageous when the difference in rate is sufficient. During a period of declining rates, the buyback can save you significant amounts. However, you have to calculate your operation because the penalties can very quickly be high. To avoid any unpleasant surprises, it is advisable to go through a mortgage broker , preferably a broker specializing in the field.
Be careful not to confuse the repurchase of credit with the consolidation of credits which aims to bring together several consumer credit in one with a single rate and monthly payment.