French renegotiation and buyout of real estate credit

The period of low interest rates pushes the population to re-negotiate their mortgage with their bank, or even to make a loan redemption by requesting a pooling expert.

Several options to improve your mortgage

Several options to improve your mortgage

Real estate renegotiations are in full swing. The French do not hesitate to take the step to achieve potential savings of up to several thousand euros. But what is it? Concretely, borrowers are able to revise the terms of their loan agreement. They have two methods to achieve this: renegotiation of credit or the repurchase of credit. The first operation will simply consist in trying to obtain a better interest rate or to reduce the amount of the borrower insurance premium. This guarantees, in this case, the payment of the credit in case of failure during the depreciation phase.

The second solution that presents itself to the French is the repurchase of the mortgage. Here, in addition to including a better interest rate, all loans from the same household will be added in one monthly payment. The advantage is that all credits will benefit from a single rate. How is this timely? In fact, housing loan interest rates are lower than those charged by consumer credit institutions. It is, therefore, possible to reduce their costs during a real estate loan buyback, but only if the total outstanding purchases are made up of at least 60% of one or more home loans.

A wave of renegotiation and repurchase of credit following historically low rates

A wave of renegotiation and repurchase of credit following historically low rates

But why are the French so interested at the moment to seek better credit conditions? In this case, interest rates have never been lower with an average of 1.39% in March 2019 according to the housing observatory. Households are therefore able to take out beneficial real estate loans since 2016. Indeed, credit has never been cheaper, thanks in particular to the accommodative investment policy pursued by the Sentro Bank (SB).

Are renegotiation or repurchase of credit still effective? It should be known that in exchange for a financing agreement for the purchase of a habitat, a household pays interest to the lending organization. This is what actually remunerates the risk and effort of the bank. This remuneration is generally paid during the first years of repayment of the loan. To do this, one must be vigilant to start renegotiating or repurchasing loans during the first third of the amortization period. After this period, the majority of interest is already paid to the lender and the effectiveness of a renegotiation or redemption transaction is reduced. Finally, the interest rate after renegotiation or redemption must be reduced by at least 0.70% of the original rate for a real gain to be realized.