Renegotiating loans: a flourishing market
May 12, 2019
The financial crisis that has plagued the economies for more than five years has led banks to toughen their access to credit, dropping by more than 25% the volume of loans distributed in 2012 compared to the previous year. A paradox when we know that fixed interest rates continue to fall and have reached a new record in January .
The new reform on access conditions of 2013, considered too timid, will probably not be enough to revive a real estate market completely bloodless.
Interest rate conditions particularly favorable to renegotiation
The renegotiation market risks to break some records in 2013 if the low-interest rate level is maintained.
Judge for it: while fixed rates over 20 years were around 5% three years ago, a good record can claim today to enjoy a rate of 3% over the same period.
The conditions of a family mortgage Snopes family
Be aware however that a low rate does not guarantee the profitability of the operation. Indeed, many factors intervene and it is better to make a quick simulation before starting the discussions with the banks.
In general, three elements impact the final cost of the operation:
- Prepayment penalties : These are included in the prior offer and are generally of the order of 3% of the outstanding capital.
- Guarantee Fees: If the original loan has been mortgaged, you will need to release. Count approximately 1000 € of expenses for a loan of 150 000 €. On the other hand, if you have opted for a mutual guarantee, know that agencies like Credit-Housing return the share of contributions corresponding to the mutual guarantee fund (about 2/3 of the premium paid). The new loan will be subject to a new guarantee.
- Fees on the new loan: they are usually negotiable if you go through a credit broker. Otherwise, count from 0.5 to 1% of the amount of the new loan, capped on average at 800 €.
The final result of the renegotiation will depend in part on the difference between the rate of the new loan and the initial rate and on the other hand the remaining duration. Only a refinance study prepared by a professional will allow you to determine with certainty if the renegotiation is profitable.