Is the repurchase of credit a good solution?

Posted on January 29, 2016 by Marion

Is the repurchase of credit a good solution?

With the current financing conditions and the prospect of reducing its monthly payments, does the repurchase of loans represent an interest for French households? Our experts offer you a complete tour of the subject to give you a more precise idea of ​​loan redemption.

How loan consolidation works

First of all, repurchase and consolidation of loans refer to the same banking operation, that allowing several loans to be combined into one . A borrower with several loans can call on a specialized organization ( ) to consolidate his loans. The organization will settle its current loans and offer it a new credit contract including different repayment terms, that is to say an extended term , a single rate and ultimately a smaller monthly payment .

The reduction of the monthly payment is possible thanks to the extension of the duration, which can generate an increase in the total cost of the credit. That is to say that the financing will be more expensive in the end but the monthly payment will be smaller , a logical counterpart which makes it possible to rebalance the budget of owner households as well as tenants .

What to expect with a loan buyback?

When loans are cleared , there is often a prepayment charge, up to 3% for home loans, unless a clause indicating the non-presence of IRAs. Then, the setting up of financing also involves application fees and / or mandate fees, up to 7% on average of the amount of the application. For owners with collateral , it will remove the mortgage and give a new one associated with the repurchase of loans , again there are notary fees.

You should know that all these stages are managed by the specialized body which is responsible for summarizing all the costs and the cost of the operation to the borrower. The latter will only have to sign the credit contract offer to obtain the reduced monthly payment from the following month. The consolidation of loans remains a good solution since the reduction of the monthly payment can reach up to 60% of the current total amount . In addition, 1 in 2 French people in debt, according to the INSEE, considers having too heavy monthly payments, a recourse to the repurchase of loans which is legitimate and which allows above all to avoid financial imbalances .

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