When a borrower plans to use a mortgage buyback with a home loan, it is not always easy to find the perfect offer. To make sure that the new contract will be most suited to the needs of the borrower two tools are available: use the services of a broker, expert comparison of offers in the market or conduct an online simulation alone via a comparator.
The redemption of credits, what is it?
When a household accumulates too many credits, its financial situation can quickly become complicated. The weight of the monthly payments but also the expenses related to the various credits are likely to lead to certain difficulties, even to a situation of over-indebtedness.
To remedy this effectively, it is possible to redeem credits. Also called loan consolidation, renegotiation or debt restructuring, this is an optimal financial arrangement. The concept ? Collect all outstanding loans previously borrowed by a borrower by subscribing to a new loan. This operation can be carried out directly at your own bank or through another institution specializing in credit. By collecting all the loans, the borrower will be able to obtain not only a reduced renegotiated rate but also to benefit from a single and reduced monthly payment. In return, the total cost of the new loan will be increased and the repayment term will be extended.
It is possible to consolidate consumer credits, be they earmarked loans or personal loans, mortgages or overdrafts or personal debts.
Subscribe to a loan buyback with a mortgage
The editing can take different forms:
- the borrower can choose to consolidate only his conso credits and leave aside a mortgage already negotiated at an attractive rate and with good conditions
- it is possible to combine both credits and a mortgage in the form of a single loan
- the borrower who makes a repurchase of credits conso can also include in this assembly a new mortgage or a sum which will be used as cash to finance a new project
Thus for households wishing to acquire a new home whether it is an apartment or a house, it is possible to include this new loan directly within a restructuring scheme. To be eligible, however, it will be necessary to present a solid file because this operation is complex and some establishments can be very demanding vis-à-vis this type of request. Good financial management, professional stability and savings capacity will be key assets to ensure a favorable response.
The debt ratio will be one of the main criteria for the award of such a contract. It is a decisive factor in terms of solvency and generally it must not be less than 33%. The objective is to avoid that the operation does not come to disturb the stability of the finances of a household.
The loan application must be made at the same time as the consolidation and will lead to a rigorous analysis of the financial experts of the lending institution.
The key points for comparison
Before embarking on a frantic search, it must be ensured that the future loan will be more profitable than the sum of the precedents. Indeed, the main objective of a loan consolidation operation is primarily to save money and rebalance its budget. In order to see more clearly, there are key points to build on when comparing different bundling offers:
- the rate: fixed in accordance with a usury rate and regulated by law, the interest rate that will apply to the new credit may differ. Indeed, rate policies may vary from one institution to another. Even if it is the file of the future client which will be determining, it is a primary criterion to analyze.
- the amount of the monthly payment and the repayment period: by centralizing the repayment of the credits within a single loan, the monthly payments and the repayment period are recalculated. Thus, the more the amount of monthly payments is reduced the longer the repayment period will be extended and vice versa.
- the guarantee: depending on the file and the financial situation of the future customer and the policy of the new creditor, the value of the guarantee to obtain a loan buyback with a mortgage is likely to be more or less important.
- the amount of the prepayment penalties: when applied, the prepayment indemnities (ARI) must not exceed a ceiling of 3% of the total principal amount of the outstanding balance.
- handling and administration fees: these can vary from one bank to another. It will be necessary to be particularly vigilant on this point and to read attentively all the information.
- the amount of the insurance contributions: if it is not compulsory, a borrower insurance is strongly recommended during this assembly. If the amount varies by profile, it is important to know that there is no requirement for a borrower to purchase insurance in the same institution as the credit. It is quite possible to use the insurance delegation.
Broker or simulator online, how to choose to compare?
When one wants to redeem consumer credits and include in this montage a mortgage, it is not always easy to navigate the range of proposals currently available in this sector.
To be accompanied throughout the search, a borrower can solicit the services of a broker. This professional financial market and banking is a real expert in comparing offers. A broker presents the usefulness of proposing a truly personalized study of his client’s file and thus directing him towards the offer most adapted to his needs and his budget. It has all the essential information about the different offers and formulas available on this market. A significant asset to compare available contracts and choose the best. Real broker between the borrower and the specialized institutions, a broker will simplify all the steps and will be in charge of the negotiation with the other actors of this sometimes complex operation.
Another possibility: perform several simulations online. Indeed, at present most of the players on the credit buyout market have not only a platform and a website but also a free online simulator.
The user can thus fill in the information essential to the constitution of an estimate online immediate and free. This includes the age, household income, the number of loans you want to include in the grouping, the remaining term and the amount of current monthly payments.
The future customer then receives a quote sent directly by email or phone. To get a clear idea about the different offers that a borrower may possibly be eligible for, it is interesting to repeat the simulation on the largest possible number of sites. With quotes in hand, it will be easier to make your choice and thus obtain the best offer of loan consolidation with a mortgage.