Real estate loans rate and term refinance program at some point by their creditors via early repayment. This is to re-borrow money with a lower interest rate in order to benefit from a lower monthly payment. The refinancing maneuver concerns only fixed rate loans that cannot be reduced
Refinance your mortgage
Adjusted only for fixed rate loans, the rate and term refinance program is used to repay the remaining principal due before maturity. The procedure is to re-borrow the amount to be repaid at a better rate than the initial rate. However, it is only accessible with the payment of prepayment penalties, which generally amount to 3% of the outstanding capital.
In short, if you are thinking about a credit refinance, it is important to study the rate of your current credit and if you have the opportunity to lower it to a lower level … However, you will also need to estimate the amount of your credit. Advantage of such a method on the remaining repayment time. Two options can also motivate the use of this anticipation of repayment, it is:
- Lower interest rates,
- The improvement of the borrower’s financial situation.
In the field of mortgage lending, credit refinancing is also called credit redemption. There is also talk of debt consolidation for households with multiple loans. In this case, it is a financial solution to make a buyback of all outstanding debts to consolidate under one credit.
The main objective of such a maneuver is to reduce the interest rate of the mortgage. It allows to start a negotiation with a new bank on the credit rate, the loan insurance rate, the TEG and all bank charges incurred by the management of the account.
Two months are enough to conclude all the steps necessary for the operation: the research, the competition, the publication of the loan offer and the release of the funds.
The types of mortgage refinancing
Currently, lending institutions are developing attractive proposals for their clients in view of the emergence of new players in the credit sector. Thus, we are talking about three types of rate and term refinance program most in demand:
- Refinancing mortgage loan through the owner,
- Refinancing of consumer debt carried out exclusively for the tenant and the owner,
- Refinancing real estate and consumer credit for homeowners.
A mortgage or bond insurance is required for a loan amounting to € 30,000 or more if the owner is thinking of refinancing his mortgage. In addition, the mortgage ratio must be below 80% in order to benefit from such a procedure.
Refinance your mortgage
If your mortgage is too expensive for you because of the rate you have, which is higher than the current market borrowing rates, you can renegotiate it by making a credit redemption and benefit from lighter monthly payments.
The operation of a loan renegotiation
Renegotiating a loan involves reviewing its rate, its repayment term and the amount of monthly payments. To carry out a credit buyback transaction, you need to use a broker specializing in credit refinancing. After verifying the relevance of a credit buyback transaction, depending on your financial situation, the broker undertook to assemble your mortgage loan refinancing file. If you are currently repaying several credits, you can take advantage of the transaction to consolidate them and then repay only one loan.
When is a refinancing interesting?
Since the borrowing rate of the loan you are repaying is at least 1 percentage point higher than current average rates, a refinancing will be advantageous because you will reduce the cost of your credit. If you repay several credits, the refinancing operation is particularly interesting to review the amount of your monthly payments, your loan term and of course the rate of the new credit. To fully visualize all your possibilities, it is recommended that you make a free redemption credit simulation online.
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