What is a mortgage buyout? How does this process that allows you to group your monthly payments work? We tell you everything, with the advice of our specialized partners.
What is the repurchase of real estate credit?
The repurchase of credit, how does it work? The repurchase of real estate loan, also called regrouping, restructuring or consolidation of real estate loan, consists in:
- Take out a new mortgage at a new bank to benefit from a better interest rate;
- Gather several home loans (or not) under a single loan and monthly payment. These may concern variable amounts, subscribed to different periods and at different rates with several banks.
Generally, you have two scenarios:
- Keep the same maturities but reduce the duration of the loan to repay it more quickly;
- Keep the same repayment period but lower your monthly payments to improve your purchasing power.
Why buy back a mortgage?
Several reasons can lead you to carry out a loan buyback operation and in particular the buyback of a real estate loan:
- Avoid or overcome a situation of over-indebtedness;
- Reduce the amount of a credit or the number of installments to be repaid each month to improve its purchasing power;
- Take advantage of lower interest rates.
- Refinance your home loan.
Obviously, it is the historically low real estate rates for a few years that push most borrowers to request a mortgage buyout. If your real estate rate is now above 2%, it is in your best interest to renegotiate your credit.
When can you redeem your mortgage?
In recent years, the purchase of home loans has become a strong ally in the fight to increase your purchasing power. Indeed, renegotiating your mortgage can save you up to tens of thousands of euros on the total cost of your loan. But the questions that need to be answered are these:
- Redeem your mortgage, but after how long ?
- How to calculate the repurchase of a mortgage ? Everything depends on the contractual clauses of the loan taken out. Since 1999, there have been contracts excluding penalties when buying home loans followed by their early repayment (IRA), but under certain conditions. Otherwise, the legal penalty amounts to 6 months of future interest, with a maximum of 3% of the outstanding capital. From the year, around 7 or 8 years in general, which makes you benefit from an interest gain thanks to the lower rate of the new loan, do not hesitate to renegotiate it.
Thus, for the purchase of your immo loan to be really interesting, you must meet 5 essential conditions:
- The remaining credit term must be greater than the elapsed term;
- Observing a 1 point difference between the interest rate you receive and the rate currently applied over the same period;
- Have outstanding capital greater than at least 50,000, or even 70,000 euros;
- Benefit from a good financial situation compared to the time when you took out your loan;
- The credits you want to redeem must have been subscribed over the length insofar as the largest part of the interest is paid during the first years of the loan.
How to buy back a mortgage?
To buy back your mortgage and refinance it, you just have to compete with several real estate loan brokers specializing in loan buyback and choose the one who will offer you the best real estate rate . To do this, you can also go through our online real estate loan buyback offer comparison tool.
Before taking the plunge, however, take the time to calculate the total cost of the operation.
What is the difference between renegotiating and buying back a mortgage?
The difference between the renegotiation and the repurchase of mortgage is simple:
The renegotiation of mortgage credit consists, as its name suggests, in renegotiating the terms of your mortgage with your bank. However, nothing obliges him to accept. The repurchase of immo credit implies for its part the repurchase of your loan by another bank.
Why compare your mortgage buyout?
Redeeming your mortgage should allow you to increase your purchasing power or benefit from a better interest rate. However, as we have seen above, this solution, as interesting as it may be, should not be chosen in haste.
To choose the best proposal to buy back a mortgage, you have, as often, every interest in comparing the interest rates charged by the different banks likely to buy back your loan, but not only. You must also take into account the costs incurred by the redemption of your loan.
Comparing average home loan redemption rates can also help you prepare for possible reluctance from your bank when renegotiating your loan. In this case, playing the competition card by relying on a well-crafted file and the offers offered by an online real estate loan redemption simulator will allow you to have solid solid arguments to negotiate the drop in your borrowing rate. with your banker, especially if you want to consolidate your home loan and your various consumer loans to have only one monthly payment.
Global repurchase of a mortgage, how much does it cost?
How to calculate a mortgage buyout? To answer this question, we must add the amount of penalties, administrative fees, and any notary fees. The amount of interest remaining due will be given to you by your bank. The calculation of the costs of buying back the home loan requires comparing it to the amount of interest on the new loan, plus the costs listed above.
Should there be other costs when buying a mortgage?
Should we consider notary fees for a loan buy-back ? Yes, if the repurchase of real estate loans involves credits guaranteed by a mortgage under article 2417 of the Civil Code. The notary then proceeds to the cancellation of the mortgage registration. The repurchase of mortgage by bank guarantee or pledge of a sum placed with the lending bank does not require going through a notary. The overall amount of these costs will be compared to the cost of the new loan.
Why buy back your mortgage with lesferets?
There is no shortage of good reasons to compare your home loan buyout with lesferets:
- Free
- Fast
- Sans engagement
- Accessible 24h/24, 7j/7
- Independent
- Impartial
Frequently Asked Questions
When to buy back a loan?
For your credit redemption operation to be conclusive, you will have to submit your application file in the first third of repayment of your mortgage : where the share of interest is still large enough to allow you to make substantial savings.How does a home loan buyback work?
By buying back your home loan(s), the financial organization offers you a single new monthly payment that is lower than your current debts. On the other hand, the duration of the loan will be lengthened and will entail a greater cost.What is the best bank for a mortgage buyout?
To find out which bank is the best to carry out your mortgage buyback project, the solution is to use our mortgage buyback simulator . Depending on your profile and your project, it will determine for you which organizations offer the most suitable offers. You just have to choose.Home loan guides and news
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