How to be sure that his credit redemption is financially interesting?

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The repurchase of credit offers many advantages for the borrower who will pay less interest over the long term and will be able to achieve significant savings. How to know if this operation is financially interesting?

Loan consolidation can be implemented when there is a change of domicile or a larger financial transaction. It makes it possible to reduce the amount of its monthly payments by replacing the loans subscribed by another one at the more advantageous rate.

Fees must be less than expected

Fees must be less than expected

The repurchase of credit gives the borrower the possibility to reduce the amount of his monthly payments and to rebalance his budget in return for an extension of the repayment term.

To know if a repurchase of credit is interesting financially, it is advisable to study the expenses which are related, namely:

  • Early Redemption Payments (IRAs) : This is the most important expense for the borrower. The IRA amounts to either the equivalent of 6 months of interest on the amount of the capital repaid, or 3% of the amount remaining due. The lowest amount is retained by the bank.
  • The guarantee fee : if the transaction is secured by a mortgage, notary fees corresponding to approximately 2% of the outstanding amount will be applied for the release;
  • The handling fees : these costs of the order of approximately 1% of the amount borrowed are payable to the bank which is in charge of setting up the repurchase of credit.
  • Possible brokerage fees .

Thus, if it is possible to apply for a mortgage repurchase at any time, several conditions must be met for the transaction to be considered profitable:

  • The outstanding capital of the mortgage must be greater than 70,000 USD;
  • The nominal interest rate must be 1% lower than the previous rate;
  • The repayment phase of the credit must be in its first half.

For a purchase of consumer credit, the outstanding capital should ideally not be less than 15 000 USD or 10 000 USD, according to the organizations.

If you do not meet these conditions, you can still apply for a repurchase of mortgage and / or consumer credit by negotiating, for example, the application fees to make the transaction profitable.

Make an online credit redemption simulation

Make an online credit redemption simulation

To determine whether a repurchase of credit is financially attractive, the best solution is still to use a free online simulator . The use of this tool is simple: you only need to indicate certain information on the loans subscribed (nature, amount, duration) and the new desired monthly payment. To do this, take out your home loan and amortization schedule. Make a simulation of credit redemption allows you to know the cost of this operation to then compare the offers.

It is strongly advised to contact a broker who will help you evaluate the feasibility of the credit redemption according to your financial situation and your profile. This market specialist, which has a large network of partners, is able to offer you offers on advantageous terms.