With mortgage rates still so low, many borrowers take the opportunity to renegotiate their loans. They have two possibilities: either they renegotiate the terms of their loan directly with their bank, or they apply to another financial organization to redeem their credit (s). And most often, the second choice turns out to be the better of these two solutions.
If you buy back credit from an organization external to your bank, you will have to pay additional costs such as penalties for early repayment of the credit, up to 3% of the principal owed as well as various other costs relating to the processing of the file and the establishment of guarantees (surety, mortgage, etc.).
The 3 conditions to carry out a credit buy-back
For your credit repurchase to be profitable, it is necessary that:
- the loan repurchase rate is at least 1 point lower than the initial borrowing rate
- the remaining term of your credit is at least 10 years
- the capital remaining due is an amount greater than 100,000 dollars
If of course, your rate spread is only 0.7 point but your outstanding capital is for example 290,000 dollars over 10 years, do not hesitate to embark on a credit buyback operation because it will be advantageous!
With a lower interest rate, you can either reduce the amount of your monthly payments or reduce your repayment tenure. In both cases, you are a winner because you will save several thousand dollars on your initial credit.
Credit repurchase: take the opportunity to finance your work!
Do you want to finance your work? When you make your credit repurchase, you can very well integrate into your credit repurchase the amount you need to carry out your work.
In this case, the amount purchased will be higher and you will not save money on your monthly payments. You will also not be able to reduce your repayment tenure. However, you will finance your work immediately using the amount you would have saved on your credit repurchase: your work will therefore cost you nothing!
And you, have you ever taken advantage of a loan repurchase to finance your work?