When rates are low, which is still the case today, the ideal period is to buy back credit and take advantage of more favorable borrowing conditions. With borrowing rates still low, it is essential to approach the subject of a renegotiation or a repurchase of credit. The first step is to make an appointment with your bank advisor to review the conditions of the mortgage during repayment (interest rate and loan insurance). We are talking about renegotiation.
The repurchase of credit, it consists in canvassing another organization so that it repurchases the credit, that then making it possible to profit from new borrowing conditions. It is also possible to carry out a grouping of credits when one wishes to make a repurchase of credit: the new financial organization regroups all your loans (mortgage and consumer loans) so that you have only one monthly payment settle at a new fixed rate. It is therefore a new credit.
Finance new projects and reduce monthly payments
The loan buyback operation is for everyone, whatever the plans. Also, with a single new monthly charge at a fixed rate, you can reduce the amount of the new monthly payment by up to 60% and thus be able to finance new projects (vehicle purchase, completion of work, new real estate project. However , note that the cost of credit will then increase because your repayment duration will be extended.
Very attractive loan buy-back rates
Still low credit rates encourage borrowers to buy back a mortgage. In August 2019, the record average rate was 1.17%. Currently, for a loan repayable over 15 years, this rate drops below the 1% threshold, with 0.96%. It is thus advisable to make a repurchase of credit or to carry out a grouping of loans, by profiting from a rate similar to that of a loan to the habitat if the outstanding in the habitat are higher than 60%, and pay then cheaper by preserving the same duration. A lower rate makes it possible to reduce the overall cost of the mortgage. Note that this mechanism reduces the cost of consumer loans, which have much higher rates than that of a mortgage.
Make a credit buy-back: are there any constraints?
For a repurchase of credit to be profitable, it is necessary that the capital remaining due is of an amount equal to or greater than 75,000 dollars . You must also be in the first third of repayment of the mortgage because it is during this period that most of the interest is amortized. Finally, it is essential that the difference between the current rate and the new credit repurchase rate be at least 0.75%. Gathering these criteria allows compensation for expenses related to loan repurchase, which can generate early repayment indemnities billed by the original lender as well as intermediation fees.