BORROWER: BETWEEN RENEGOTIATION AND REDEMPTION, WHAT TO CHOOSE



BORROWER: BETWEEN RENEGOTIATION AND REDEMPTION, WHAT TO CHOOSE

With a real estate market, which is doing very well and interest rates still very low, the production of loans has more than doubled compared to 2016, reaching 250 billion euros in 2017. Worn by conditions still very favorable, borrowers can today seriously consider their credit and then determine, if the time is conducive to renegotiation or redemption.

WHAT ARE THE PARAMETERS TO CONSIDER FOR THESE TWO FINANCIAL OPERATIONS?
Beyond the extremely favorable context for credit repurchase or renegotiation operations, it is advisable to make some calculations, before going head to head and subscribe to one or the other: indeed, whatever the option chosen, it generates costs that must be absorbed, so that the approach remains interesting. Here are the different parameters to consider before you decide.

Common costs
The low rate. At the time of extremely low interest rates (and therefore, attractive), it is interesting to wonder about its mortgage. For example, in a renegotiation, you need to obtain a point difference of at least 0.5% between your rate and the new proposal, so that this operation absorbs the costs incurred and allows some savings.

The costs incurred. As part of a renegotiation, only the application fees are to be considered; on the other hand, for a redemption, you have to add the mortgage fees, for the implementation of the new loan.

Insurance. The weight of the insurance in a credit is very important: in the context of a renegotiation, it is possible to keep it under certain conditions; in the case of a redemption, it must be the subject of a new membership contract.

Costs specific to the repurchase of credit
IRA penalties. Beyond the strict rate obtained, a borrower must take into account, in his calculations, IRA penalties to be paid, traditionally equal to 3% of the outstanding capital, within the limit of 6 months of interest.

Costs specific to a renegotiation
The life of credit. Such an operation is only valid if the credit has not exceeded the first third of its life: beyond that, a renegotiation is not recommended, since most of the interest on the loan will have already been paid.

RENEGOCIATION OR REDEMPTION: WHAT PREFERRED OPERATION IN 2019?
All of these elements require special attention: it is only after careful study that it will be possible to determine whether you need to start a renegotiation or a buyback.

The ideal is to entrust this laborious task to an expert in real estate credit - both for his knowledge of the trade, and for his negotiation skills. A broker knows the operation of banks and knows perfectly the elements that influence their decision: therefore, he will quickly assess your situation and determine which partner to turn to
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