The buyout of real estate loan keeps the rating in 2017 and in 2018Loans 

The buyout of real estate loan keeps the rating in 2017 and in 2018

Average mortgage rates are approaching historic monthly records. Borrowing rates currently posted by brokers are even lower than last June’s previous record. It is therefore a good time to redeem real estate loans in 2016 or 2017 or to renegotiate your loan with your bank. And that will be the case again early 2018. Take advantage of the very low rates to save several thousand euros on the subsequent repayment of your mortgage. The number of repurchase of mortgage remains high After a year in 2015 where mortgage interest rates broke records month-to-month at the beginning of the year, a significant portion of old borrowers bought back their loan or renegotiated a rate cut with their bank. . Despite this, the potential number of mortgages that may have an interest in being redeemed or renegotiated is high. The Banque de France has just published a statistic: renegotiations and redemptions represent 37% of the production of mortgage loans in January 2016. Since then, rates have fallen again sharply as shown by our monitoring of the evolution of mortgage rates. in December 2017 . Financing brokers posted rates down 60 to 85 basis points compared to those of early January for any type of repayment term. Moreover, the best rates that are obtained by the borrowers who have the best records also beat records with for example a rate for a loan over 10 years between 0.91 and 1.00% or a rate for a credit over 20 years included between 1.30 and 1.48%. Never seen and it is still possible to see further decreases in the coming weeks given the financial context. Who has an interest in buying back the loan in 2017 or 2018? For a loan to be financially attractive, several criteria must be met. Anyway, it does not cost anything to make a mortgage buyout simulation and see if it’s beneficial to you or not. Here are some criteria to consider when determining the interest of a buy-back or renegotiation:  You must still have enough money to repay. If you have less than 5 years of repayment, it may not be worth it. We must take everything into account. On a loan that is in its second half of repayment, the financial gain on the interest will be lower, but the one on borrower insurance can be much larger. We explain in our article ” A redemption of mortgage is it interesting that the beginning of the loan? ” You should not neglect the gains on the mortgage insurance when you make a redemption of mortgage on an older loan.  The new interest rate must be much lower than the old one. We usually talk about a difference of at least 100 basis points (for example 2.00% instead of 3.00% or more), but again, we have to look at it on a case-by-case basis according to all the financing parameters. . Do not forget that to buy your loan, you will have to pay a fee to your bank. Some kind of compensation to end the current contract. These prepayment charges for redemption by another bank are capped. It is therefore necessary to make sure that the gains generated by a purchase are much higher than the cost of this end of contract. This is part of the pitfalls of loan redemption . Renegotiation without changing banks or repurchasing by another bank? To lower your interest rate you have 2 possibilities:  Either you redeem your home loan by another bank at a lower rate. This costs you a prepayment fee and asks you to open an account at another bank.  Either you ask for a renegotiation with your current bank . It will also cost you a fee, but it will normally be lower than a full prepayment. However, the proposed new rate may be lower than what a competing bank can offer you and it must also be verified that this does indeed generate a new calculation of the borrower insurance contributions on the basis of the new capital remaining due. To help you choose and compare the offers of these two solutions, see our article ” Is it better to renegotiate or make a redemption for its mortgage?” In 2017 and 2018, banks are still a lot of competition to recover or retain old mortgages in the course of repayment. Reduce its loan term or monthly payment? The conditions are met for you to earn money (sometimes up to several tens of thousands of euros) by getting a much lower rate for the end of the repayment of your loan with a new contribution of lower borrower insurance ? You will then have different strategies for the financing plan of your new mortgage. You can either choose to reduce the length of repayments compared to what you have left on the old contract, or choose to reduce the monthly payments by maintaining a similar duration or a mixture of both. The most cost-effective solution is to minimize the repayment term by keeping similar monthly payments, or even increasing them if your financial capacity is sufficient. You will repay much faster and lower the total amount of interest and in addition, you will have several months of insurance premiums to pay less. Nevertheless, if your financial situation is currently more difficult and you need to have a little more financial margins every month, you will be interested in lowering your monthly payments. This will allow using this monthly difference for other needs. It has never been more interesting to buy real estate loans than between 2016 and 2018. Interest rates for home loans are at their lowest and could last several weeks or months. Nevertheless, we are not immune to a rise in rates within a few months. So you have to enjoy it as much as you can, and the sooner you do it, the more you will win. Not sure that the even lower rate expectation compensates for the shortfall on the current repayments you make. So make a simulation of repurchase of mortgage loan

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