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
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.