Which credits to buy back

The repurchase of credits can be a solution to the difficulties. However, it is important to know which credits to buy back and how to proceed. Learn more

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The repurchase of credits, for whom? Why ? What are the credits concerned?

The repurchase of credit is an attractive solution when it becomes difficult to repay its debts. It allows you to group all your credits into one in the same banking establishment by extending the repayment period but above all by reducing the monthly payment which gives us the feeling of reducing our budget.

Although it has short-term, long-term advantages, credit redemption is not always an economical solution. Indeed, the longer the repayment period is in order to reduce the monthly payments, the more we increase the total cost of our credit via the additional interest that we will repay. So do we have to buy back all the credits? What credits can we redeem?

First of all, when we talk about credit redemption, several situations are available to us. The first corresponds to the repurchase of real estate loans, which can be grouped together with one or more consumer loans. The second corresponds to the repurchase of unsecured credits (namely one or more consumer credits). Finally, the third situation corresponds to the repurchase of bridging loan.

The repurchase of credit is a solution which is offered to all, but which is often chosen by the people with the limit of the overindebtedness, having not deposited a file with the Bank of United States. However, we will have to justify a serene banking history (no filing at the Bank of United States, no banking ban) as well as long-term income at the time of the redemption request. People on permanent contracts, retired or pre-retirement are therefore eligible for credit redemption. In the case of a fixed-term contract or an interim contract, the files are studied on a case-by-case basis by the banking organizations. Remember: when you take out credit, remember to make sure you are able to pay it off. Accumulating small credits here and there can lead you into difficult situations at the end of the month.

Case of mortgage loans

You own a property and you want to change the conditions of your mortgage (s), but also, if applicable, those of your consumer loans, several solutions are possible depending on what you want: reduce monthly payments, reduce the repayment term, get better interest rates.

First of all, when we talk about the buyback of single mortgage loans (without integrated a buyback combined with one or more consumer loans), it is important to think first of all about the interest rates linked to this buyback. Indeed, the interest rates on the mortgage vary over the years, so it is sometimes interesting to resort to the repurchase of credit, when the current rates are lower than the rates of your old credit (currently according to your situation, you can find mortgage loans with rates of 1.4%).

It is imperative to keep your objective in mind and estimate the costs that this buyout will generate. So, when you are looking to reduce your monthly mortgage payments, look at the repayment period you are in. The redemption will not be the same whether you are at the beginning or end of the reimbursement. Thus, for your repurchase to be interesting, if you are in the first third of repayment, you will have to subscribe to a repurchase of credit with a new interest rate lower than 1 point (0.01%) whereas if you are in the 2nd third, you will have to look for rates lower than at least 2 points (0.03%). The other case is when you are looking to get rid of your mortgage by ending your mortgage more quickly. In this case, you will seek to reduce the duration of your credit. For this to be beneficial for you, you will need to make sure that the sum of the monthly payments and that of the interest that you will repay is less than what you should have repaid without the repurchase of the credit.

The second possible case for buying a mortgage is to couple it with one or more consumer loans. Note that you cannot combine loans such as the PTZ (zero rate loan) or the 1% housing loan. Other consumer loans and mortgage loans can be grouped together to be redeemed under the same loan.

In both cases, the new banking organization will take charge of the repayment of all or part of your debts and you will only repay a monthly payment to the latter, over a period ranging from 5 to 30 years. The monthly payment will therefore vary depending on the interest rate at which you have negotiated the new contract, your debt ratio and your income. Remember that when you redeem your mortgage, the bank may ask you for guarantees and can make a mortgage on your property. If you do not repay your loan, your property will therefore be seized and auctioned to compensate the financial institution.

Finally, you will note that when the share of real estate loans does not exceed 60% of the total amount due to the various funding organizations (or, if applicable, to the same organization, if all your credits have been taken out at the same place), the repurchase of credit is considered a repurchase of consumer loans. The share of consumer loans must always be greater than 40% of the total amount to be repaid.

Case of the repurchase of consumer credit

In this case, no need to have a mortgage to request the repurchase of your credits, you just need to have one or more consumer credits of the assigned credit type (intended for the purchase of a good, financing of a defined project), personal loans (the funds can be used without proof), personal microloans (when your situation does not allow you to subscribe to a consumer credit), revolving credits (revolving credits) or student loans .

As for the repurchase of a mortgage, you will call on a banking organization which will take care of the repurchase of all or part of the sums that you owe, thanks to the early repayment of your debts. This will then allow you to benefit from advantageous rates. In the case of revolving credits, the rates can reach up to 20%. Redeeming your credit by coupling it to others will therefore allow you to lower the rate and costs associated with this credit. Be careful though: the more you extend the duration (the maximum being set at 12 years) and reduce the monthly payments, the higher the costs. It is therefore imperative to carry out simulations of real costs (there are a large number of websites allowing you to carry out simulations very easily, do not hesitate). Also remember that you will probably have bank or brokerage fees (if you decide to use a broker to discount you the best offer). In addition, the new organization may impose insurance on you, which will increase costs. So find out about the real gains and costs of this type of transaction.

Case of bridging loans

Finally, when you want to move and you are already a homeowner, it is possible to take out a bridging loan. This loan will allow you to buy the new property while waiting to sell your old property. The time between the two transactions is short: from 6 months to one year. The repurchase of your bridging loan therefore allows you to increase the time between the purchase and the sale of your goods. Be careful, however: if you have not sold your property during the period fixed on the contract, the banking organization is obliged to renew this period once. Beyond this extension, you may be forced to repay all of your credit to your bank ... In this case, the redemption of your bridging loan can be a godsend to get you out of a critical situation. While this is the most common case, it is not the only one. The repurchase of a bridging loan can be carried out when you change your mind, such as when you decide not to sell but to rent your home.

Whatever your choice, you can either buy back your relay loan to subscribe to another bridge loan from another banking organization. This solution is very expensive, you will have to sell your property as soon as possible. Why ? Because when redeeming your bridging loan, you will have to pay all of the capital due but also all of the interest related to this amount. The other solution is to take out a depreciable mortgage allowing you to rent out your property that you cannot sell to repay your monthly loan payments. It is also important to note that many banking organizations are suspicious and ask for guarantees, as in the case of the repurchase of mortgage, the mortgage of your property.