Enlarging the house, building a swimming pool, a veranda or a garage, raising the height of the villa…. a residential property that one hopes to sell later to obtain a capital gain requires the mobilization of a certain budget that an acceding or acquitted owner does not necessarily have to have. Is it necessary to finance the work with another consumer loan such as a construction loan or to ask the State for help? But if you already have outstanding loans, can you still keep your debt capacity below 33%? Besides, the fact of compiling the different monthly payments may unbalance your budget. Another alternative known by borrowers in a difficult situation of credit repayment proves to be relevant to carry out the transformations of its housing: the purchase of credit financing works. We explain everything to you!
The problem of real estate loans
Used real estate often requires alterations, renovations, and new construction according to the owner’s needs. However, to become the owner of the house, the latter has already had to take out a real estate loan in which he has integrated a sufficient fund for the work. But the problem is that the amount envisaged is distributed in the repayment of the monthly installments of the credit and unforeseen expenses
To face works of moderate cost such as repainting the exterior paint, joinery, cleaning of gutters, maintenance of the waterproofing of doors and windows, renewal of water pipes, installation of alarms ….the owner decided to take out a personal loan. But the amount has its limits and given the extent of the work to be carried out, he does not have enough funds left to build the garage and the veranda.
Another solution is to finance the construction with the PEL. This has a significant advantage in terms of rates but the employer is not obliged to accept this credit. As for the PTZ, it is allocated according to the borrower’s income and the housing zone. If the borrower’s income exceeds the specified threshold, he or she is not eligible for this financing. Moreover, taking on more debt with other credits to carry out construction projects is not a good idea because it means higher monthly payments and an increase in the debt ratio. This is why we have suggested the interesting solution of credit repurchase to finance the construction operations of his housing.
The basics of credit repurchase
This financial package is used by individuals and households who have taken out loans and wish to reduce their repayment schedule. They often feel the need to reduce their monthly installments when they have a drop in income due to a life hazard such as the loss of work, the death of a spouse, illness, etc..
The principle of this operation, also called loan restructuring, is simple. A bank regroups and repurchases part or all of a borrower’s existing loans from the banking institutions where the borrower has contracted these loans. In doing so, it makes the payment of early repayment indemnities. The purpose of this debt consolidation is to be able to offer a single commitment with a single monthly payment in line with the borrower’s repayment capacity. That is to say, the amount of the monthly installment will be revised downwards to match the financial capacity of the subscriber. This decrease can be as much as 60%. The bank also takes advantage of this to review the duration of the redemption which will be longer. Debt consolidation does not require the opening of a bank account with the redeeming bank
This solution simplifies the management of the borrower’s budget while reducing his debt. But the point that interests property owners the most is that it offers a cash loan. The subscriber would have to include this request for an additional contribution when consolidating debts. Its amount depends on the borrowing capacity of the applicant for loan restructuring. In general, this amount is limited to a maximum of 20% of the total repurchase. However, if the homeowner wants a larger fund, he or she can opt for a mortgage buyback. The cash will be included in the pooled amount and will have the same interest rate as the debt consolidation.
Good to know: in the context of consolidation of real estate debts, the buy-back subscriber can consolidate debts of an amount not exceeding 200,000 euros. 200,000, which will have to be repaid for a maximum of 15 years. If he has more substantial debts, the consolidation of mortgage debts is also possible. It should be noted that social and tax debts such as bank overdrafts, unpaid electricity bills, etc. can also be grouped in this operation.
How to make a buyback + advantageous treasury operation?
First of all, it should not be forgotten that debt consolidation entails additional costs such as the early repayment indemnity for the initial credit, file fees, borrower’s insurance to guarantee the loan, mutual guarantee, or mortgage (if the bank requires this type of guarantee), and possibly the broker’s fees. The intermediary’s fee will not be counted if the borrower can find a credit buy-back offer on his or her own. However, as in most cases, the persons seeking this refinancing solution do not have a good knowledge of how the repurchase works, the use of a broker allows him to guide him in the search for advantageous financing.
Indeed, without the intervention of a broker, some banks may propose a debt consolidation contract with unfavorable repayment constraints (uncompetitive interest rate, unsuitable monthly payments, repayment period inappropriate to the borrower’s borrowing capacity….). However, an intermediary in repurchase operations has the task of negotiating the interest rate, the borrower’s insurance, and possibly early repayment indemnities to reduce the total cost of the operation.
Also, he makes the proper inspection of the file and presents only a solid case to his partner banks. It should be recalled in passing that there are only about ten banks that offer this financial solution. If a file has been refused by a bank, the latter will only study it 6 months later
Also, the simulation of the repurchase, the study, the setting up of the file, and the search for financing is free if the borrower does not accept the broker’s proposal. You can also simulate your buyback on our site to preview the cost of your future debt consolidation. The repurchase offer we propose is the best in terms of rates among our partner banks.
Coming back to the conditions of a favorable credit buyback, it is advisable to make this request when the outstanding capital is still more than 100,000 euros or 75,000 euros minimum. It is also necessary to obtain a contract with a spread between the initial rates and the new rate of at least 1 point. This difference will have an impact on the monthly payment, the total cost of the operation, and its duration. This is why we recommend the use of a specialized redemption broker with more than 30 years of experience in the business, as we do if you wish to have an advantageous loan restructuring contract.