Renegotiation or repurchase of credit, what differences?

To benefit from more attractive rates for housing financing, there are two solutions: loan renegotiation or mortgage buy-back. But what other operation is possible if other personal loans (works, car) are in progress.

The renegotiation of a credit

The renegotiation of a credit is carried out with its bank. A loan renegotiation only concerns mortgages. This consists of asking the lending institution with which a contract has been signed to modify the conditions. Concretely, it is a question of renegotiating the rate applied during the subscription of the contract. With the constant decline in mortgage rates, many borrowers are tempted to ask to apply a lower rate than that which was initially granted.

However, lenders are not always accommodating with all their customers and do not grant the same renegotiation conditions. With an excellent profile, it is possible to have your credit renegotiation request accepted (credit for civil servants often more easily accepted, for example). The formalities are relatively simple and often consist of drafting an addendum, ie adding a clause to the initial contract, which therefore remains valid. However, for less optimal applications, the procedures may be tedious and the reduction granted may be limited. In addition, the bank has no obligation to give a favorable response to a renegotiation of the loan… even if we note that more and more loans are granted to individuals.

The repurchase of mortgage

If a request for renegotiation of credit has not been successful, or if the proposed rate is not suitable, it is possible to turn to the competition (specialized bank, banking intermediary) in order to buy back credit. A repurchase of credit is only possible for real estate loans. More expensive than the renegotiation of credit, the repurchase of mortgage can make it possible to realize savings on the total cost of credit, by reducing the interest rate, and by rescheduling the duration of the loan. Given the constant decline in mortgage rates, it may be interesting to resort to this type of operation, in the event of refusal to renegotiate the loan, provided that the total cost of the operation is well calculated in advance. Because borrowers changing banks to get a better rate will have to pay prepayment penalties. It is therefore important to buy back a home loan during the first third of the duration of the contract. It is during this period that the share of interest is the most important. Moreover, for the operation to be attractive, the difference must be at least 1% between the old and the new rate.

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Read also: The different ways to redeem your credit

What about credit consolidation?

The repurchase of credit is similar, but should not be confused with the grouping of credit, which consists in grouping several credits (loans for consumption, mortgages) in order to have a single and unique monthly payment, and by the same occasion, to request an amount dedicated to a new project, subject to acceptance by the banking partners. Bundling is not necessary to get better rates. It is above all a solution to deal with an accumulation of debts that weigh on a household.

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