Credit redemption is when the borrower changes banks and renegotiates credit when he negotiates a new rate with his current bank.
The redemption of mortgage, how does it work?
The redemption of real estate credit is a type of loan redemption that consists of consolidating the real estate loans and consumption of a borrower under the same credit. We call repurchase of real estate credit when the repurchase includes 60% or more of credit property otherwise it is a repurchase of consumer credit. If the repurchase includes all the credit of the borrower it is a repurchase of total credit otherwise it is a partial credit redemption.
The repurchase of mortgage allows by a lengthening of the duration of the loan, a decrease of the monthly payments. Since it contains a mortgage, this type of credit redemption is spread over periods of between 5 and 30 years depending on the profile of the borrower.
The benefits of a home loan buyout
An owner has more expenses to assume than a tenant. There is the property tax, expenses related to condominiums or different taxes. The homeowner borrower may then face difficulties in paying these fees and his monthly payments of credits. It is indeed very common to also use credit to buy a car and finance work in his apartment for example.
The repurchase of mortgage will then allow to group everything in a single monthly payment including any debts to the public treasury or a bank overdraft. The borrower is only liable to the new lender. The new monthly payment less than the sum of old will allow the borrower to find a balanced budget. If his income permits, he will be able to add to this new credit cash for a new project. The balanced budget found often makes it possible to save again and increase the purchasing power of the borrower.
Why buy a mortgage?
The rates are not the same for real estate loans and consumer loans. In the context of a mortgage purchase, it is important to compare the new offers with the current credit offer. The repurchase of credit must be motivated by the desire and the need to make monthly savings, but the long-term cost must not be neglected either.
If the borrower’s mortgage is a few years old, it may be worthwhile for him to make a credit redemption to take advantage of the lower rates, but the costs involved in the redemption must be taken into account in the decision.
As interest is more substantial at the beginning of the mortgage, it is important that the remaining term is greater than the time elapsed for the credit to maximize profits. In addition, the remaining amount of the credit must be at least 50 000 €, so that the costs of redemption do not weigh too much in the budget.
To know: To make the right decision, do not hesitate to get closer to our experts The Centro Credit. Our specialized loan redemption advisors will guide you to the right project with the best partners.