A few years of repayment of its loan, the debtor finds that new borrowers enjoy a declining mortgage rate. It is time for him to contact his bank to ask for a reduction in his rate to reduce the amount still to pay and earn a lot of money.
Credit renegotiation offers two possibilities: either to lower the monthly payment or to reduce the duration of the credit. Here’s how to renegotiate a loan.
Loan renegotiation, a winning transaction?
“A loan commits you and must be repaid. Check your repayment capabilities before you commit “, this legal mention implies that the borrower is able to repay his current credit with the conditions under which he obtained it at the outset. If he continues to pay under the same conditions, he would not be wronged. Nevertheless, if he can obtain a more interesting rate, nothing prevents him from renegotiating his contract. Precisely, to win in such an operation must take into account certain points.
In a real estate loan, for example, regardless of the rate, the capital to be repaid remains the same. It is the interest to pay that can fall or increase depending on the rate. It is therefore clear that the advantage of credit renegotiation depends on the rest of the interest payable.
-From this first point are born two new observations:
- the renegotiation of a loan in fine is advantageous because its monthly payment is composed only of payment of interest,
- the renegotiation of a depreciable loan is advantageous. Provided that the interest remaining due is still significant compared to the one already paid.
-From this second observation are also born some conclusions:
- a real estate loan must be renegotiated if the difference in rates is significant, that is to say, greater than 1 point,
- You have to renegotiate a classic home loan called a depreciable loan. Yes if the duration of the remaining term is at least 2/3 of the total duration.
What changes after credit renegotiation?
First, with a declining rate, the debtor will pay less:
- for a loan of 200 000 € with a rate of 3.4% for 15 years, the borrower pays a total interest of 55 592,8 € is 66 392,8 € – 10 800 € insurance costs,
- for a rate of 2.15% for 15 years, the borrower pays a total of € 34,518.4 of interest with a total cost of € 44,958 – € 10,800 insurance,
- the difference in interest between these two rates is € 21,074.4.
Secondly, renegotiation entails costs and disbursements that risk negating the economic interest of the operation, especially if the creditor banker does not accept the renegotiation and the debtor is forced to go to a competing banker. Expenses include the administrative fee, the mortgage release fee and the prepayment penalty, which is optional for some banks. Hence the delicacy of the approach.
What steps to renegotiate a mortgage?
The best advice for those who want to find a mortgage is to do their research with the help of a credit broker. Because the credit broker is able to find credit at attractive rates and is a reliable interlocutor in case of a change in the universe of the loan. For those with outstanding receivables, those contracted between 2008 and 2012 are profitable to renegotiate because the average credit rate over 20 years in 2008 is 4.70% and that of the end of December 2012 is 3.55%. Two options are available to them:
- Request a credit upgrade from the lending bank. This option may face refusal from the bank. Loyalty as a customer is the argument to make to the bank.
- Solicit the intervention of another bank. In this case, the competing bank pays the remaining principal due to the old bank, plus the penalty if any, and the debtor to repay the new bank with a lower interest rate than it should pay to pay the debt with the old.
In conclusion, we must understand that renegotiating a mortgage can earn thousands of euros. In a few minutes, it is possible to earn 2000-3000-4000 euros and sometimes more. So do not miss it and prepare for it. With our method, you should be able to properly renegotiate your home loan and save a lot of money on interest.