Home loan: renegotiation and repurchase of credit are essential

The indicators are green for loans and their interest rates. For households, it’s time to borrow, while for home loans already being repaid, this is the ideal time to renegotiate them.

 

Historically low rates

low rates

Renegotiations and home loan buy-outs are very popular. In this case, this movement takes advantage of the desire of the French to obtain a better credit rate. And they are not wrong to take the necessary steps to review the conditions of their mortgage especially because the monetary policy of the Lite Lenders Bank is currently very favorable to households. Indeed, the great authority of the banks encourages consumption with historically low rates. With an average rate of 1.39% in March, according to the CSA Housing Credit Observatory, the historic low of 1.35% reached in the 4th quarter of 2016 is not far away.

For people who wish to acquire housing using financing, this has the effect of considerably reducing the cost of the credit they will borrow. They will therefore potentially have more elaborate leeway in their borrowing capacity. In addition, those who have already taken out their loan before are not left behind since the benefit of low rates can also be real. Here, these people will have to renegotiate a mortgage or even buy back credit.

 

The repurchase of credit to reduce the rate of a mortgage and facilitate the budgetary management

But how do these two operations work? The renegotiation of the loan will initially consist in warning the lending bank of its will to review the conditions of its credit. Generally, it is advisable to negotiate the interest rate again while respecting several fundamental criteria: the request must be made during the first third of the repayment of the credit because the major part of the interests is paid during this period. Once this deadline has passed, there is no longer any economic logic in renegotiating a home loan. Also, the interest rate must be reduced by a minimum of 0.70% in order to offset the renegotiation costs.

Now, a home loan can be redeemed via a banking transaction called home loan repurchase. The steps are to be made with an organization expert in grouping of credits which will buy back the loan in the process of repayment as well as all the other credits of the household. Ultimately, the combination will create a single monthly payment where consumer loans will benefit from the same rate as mortgage. A big advantage in that the rates are much higher for consumer loans. Finally, the borrower can decide to reduce up to 60% this monthly payment taken once a month on a fixed date so that it best matches his budget, but also to integrate an envelope dedicated to finance new project.

Real estate: advantageous loans boost housing sales

With very attractive credit terms, there have never been so many homes and apartments sold in a year. Professionals in the real estate market can exult at the sight of the performances recorded over one year in March 2019. According to the notaries of France and the statistical agency INSEE, it would have sold 985,000 homes during this period. The score is all the more sensational since the market has never displayed so many transactions in a year. The previous record of 965,000 goods sold also dates from the last quarter of 2018.

 

The perfect time to make a mortgage

mortgage loan

This abundance is explained in particular by French people who are massively embarking on the realization of a new real estate purchase project. And the almost unprecedented context of the cost of credit undeniably contributions to the good figures of the stone market. In the first quarter of 2019, borrowers were still benefiting from declining rates compared to the end of 2018. While observers saw a gradual rise in credit rates, the opposite finally happened.

Indeed, the Lite Lenders Bank, in charge of driving the directives of the monetary policy of the EU territories, has finally taken the decision to extend the rates which are particularly accommodating for households. This means that the average nominal rate charged in April was 1.35% for all periods combined, according to the Credit Observatory. Depending on the fixed term and the household income, banking establishments could even grant loans at 1.15% or even below. And this accessibility to financing must still continue at least until the end of 2019 according to the announcements of the Lite Lenders Bank .

 

Soaring prices in attractive cities

house loans

On the other hand, if the mortgage is most advantageous at the moment, the French have to face the increase in prices on the old housing market. An evolution far from being fair according to the places and the different zones of the territory. If on the whole the market does not suffer from overheating with an average rise of 3% in prices, the situation is nevertheless more complex in the big cities.

Paris is an example with a much more marked price increase of around 6.4% over one year in March. As a result, it becomes rare to find a property below the threshold of 8,000 dollars per square meter in the capital. With demand for the most sustained in large cities, housing continues to become more and more expensive due to the shortage. Professionals, however, seem to assert that there is no real estate bubble with an overestimation of prices.

Determine your budget and the total cost of the loan using a simulation

When we decide to buy real estate, we often start, wrongly, by looking at classified ads. Because the disappointment can be great between the budget imagined and that effective. A mortgage loan simulation will define the budget and know the total cost of the future loan.

Determine your budget and the total cost of the loan using a simulation

Determine your budget and the total cost of the loan using a simulation

Performing a mortgage loan is indeed essential to verify the relevance of the project. Potential buyers generally have a fairly precise idea of ​​the type of property they wish to acquire: house or apartment, number of bedrooms, geographic location, etc. The process is also very simple and takes only a few seconds. Visit one of the many mortgage simulators on the Internet.

It is necessary to fill for example the total amount to borrow, that is to say, the price of the goods added to the notary fees, warranty fees, agency fees minus the personal contribution.

The mortgage candidate can then try several formulas to ensure that he can borrow the amount concerned with monthly payments that do not exceed his debt ratio or 33% of his income.

What about the deferred home loan?

What about the deferred home loan?

Sometimes the type of real estate project may require something called deferred depreciation. This amounts to delaying the reimbursement of monthly payments. Concretely, several cases can arise:

The purchaser cannot assume the repayment of the monthly payments and the rent or the monthly payments of the old credit which continue to run until the moving in or the sale of the old good.
The purchaser has purchased goods in the state of completion (VEFA) and reimbursement begins when the goods have not yet been delivered.
The buyer must renovate his property before he can move in, which means paying for two dwellings during this period.

You should know that not all banks accept deferred reimbursement. They are also more or less flexible and can offer various solutions:

The total excess: the reimbursement of full monthly payments (capital, interest, insurance) is delayed to a later date.
The franchises in installments: sometimes offered by banks when an acquirer builds his property. This allows repayments to change depending on the progress of the work.
partial exemption: generally preferred formula based on the immediate reimbursement of interest, but with reimbursement of deferred capital.

This practice has a cost, however. And concerning the last solution, you should know that the interest is very high at the start of the loan. The buyer must, therefore, pay approximately half of his future monthly payments.

Is It Good To Make A Short Term Consumer Loan?

 

The use of a loan responds to various situations, such as rental investment or the purchase of household appliances. When faced with specific or urgent needs, consumer credit can be very useful. In these cases, short-term credit, with a repayment term limited to two years, is a practical and very timely solution.

The advantages of short-term  credit

The advantages of short-term  credit

  • A limited repayment period: unlike real estate loans which can be spread over 15 or 20 years, short-term credit does not exceed two years.
  • Easier to manage credit: Due to its limited duration, this type of consumer credit is subject to lower interest rates than long-term loans, because it represents less risk for the lender.
  • Simpler credit to obtain: being less risky for the organizations which grant it, short-term consumer credit is obtained more easily, because the conditions are less strict. In addition, its limited duration facilitates faster cancellation of debt.

The limits of the short-term consumer loan

The limits of the short-term consumer loan

  • Larger monthly payments: the cost of short-term credit is quite limited compared to other heavier types of credit, but it should not be forgotten that the amount of monthly payments will be higher in comparison. It is therefore useful to carefully check the short-term credit offers according to the credit platforms that offer them, in order to find a fair and competitive rate.
  • Beware of accumulating short-term credits: because of the ease of subscribing to a short-term credit, it can be tempting to get used to and accumulate a certain number. Even if the weight of a single consumer loan is not too heavy to bear, the repayment of several such loans can be risky.
  • Favor short-term credit for ad hoc needs: in order to avoid certain pitfalls, it is recommended to limit the use of consumer credits to ad hoc or urgent needs, and not on a regular basis. In the case of larger financing needs such as real estate, the use of a long-term loan is often more relevant.

 

Probably the top reason for getting a short term loan is for someone who has a bad credit record. Often people who have a bad credit record do not have access to credit cards or overdrafts. This means that if they need money quickly they do not have a way of getting any.