Few individuals can pay cash for a property or have major work done. A home loan is an affordable way to overcome these problems. In fact, if you have a construction or rehabilitation project, a rental investment project, or simply the purchase of land, the real estate loan exists for this purpose. It’s up to you to choose the best terms for a home loan, including the rate, repayment period, guarantees, etc. You may have taken out several loans over the years, including home loans and consumer loans, and you find yourself in a critical situation. You can ask for a credit repurchase, but you need to know everything about the principle of this financial practice. If you are astute, you could even benefit from additional cash flow.
The unavoidable circumstances for a mortgage buyback
You can no longer solve your financial and liquidity problems yourself. Your purchasing power is very critical. You have several monthly payments to pay every month. All your debts are due at the risk of bringing you before the over-indebtedness commission. These are all unavoidable circumstances that can lead you to buy back credit. In fact, buying back credit is the ultimate solution to your situation. This consists of combining all your debts into a single credit. If your request for a credit buyback is accepted by a financial institution or bank, you only have one contact person, which is ideal. You have only one monthly payment to make, with a significantly lower amount compared to the repayments of your many outstanding loans
If credit repurchase is unavoidable, what is the best procedure to follow?
You need to find a bank offer that allows you to take advantage of the best rate. In any case, you should look for a decrease in monthly payments, even if you have to extend the repayment period. The rate must be competitive to allow this reduction. If this is the case, i.e. if there is only one loan but the cost is higher than the totality of the current loans, the lengthening of the duration of the credit is inevitable to reach acceptable monthly payments. The best procedure is therefore to put several financial institutions in competition to be able to negotiate the best conditions. If you are unable to carry out comparative studies, negotiations, and the choice of the most advantageous establishment, you must go through a real estate loan broker. There is a price to pay, but it is a way to avoid making mistakes and risk regretting them for a long time
What advantages can I get from a credit buyback?
The credit buyback must allow you to save on interest, otherwise, you risk making your situation worse. One of the advantages directly seen is the significant reduction in monthly payments when all the loans are combined into one. To this end, the repayment problems of several loans are alleviated. This being said, all types of loans can be bought back, for example, consumer loans, personal loans, real estate loans, etc. Also, the loan repurchase enables the financing of other activities or a profitable project of the borrower. You no longer have to take out a new loan and at the same time avoid the accumulation of debt. Your purchasing power returns to where it was before you had several loans. The monthly stress is dissipated by the well-weighed credit repurchase. To be able to benefit from all these advantages, entrusting your file to a broker is the most astute of decisions. The credit repurchase broker knows by heart the banks that will be able to accept your situation and your expectations. The broker can make the comparison and the reasoned choice in your favor. You can save time and the certainty of being accepted, while also enjoying the lowest rate on the market, especially if the real estate loan is part of the loans to be repurchased.
Buying back credit is not always advantageous: what are the difficulties?
You have to be prepared that your overall debt will be increased in terms of total amount. The reduction of the monthly payments is obviously a function of the lengthening of the repayment period of the single loan. You must be aware of the early repayment penalties that represent fees that the bank charges you in case you repay your credit before its term. You should also know that a feasibility study is essential before deciding to validate your file. This can cause a problem because the bank’s financial advisors can take too much time by requiring a list of supporting documents that are more or less difficult to provide. You must also expect a refusal of your request to buy back credit, since you are in a situation of over-indebtedness, if you have accumulated risks of non-payment over the months, etc. Even if you turn to a broker, there may be inconveniences, such as an indemnity ranging from 1% to 5% of the amount of the real estate loan. To avoid inconveniences, your relationship with your broker must be based on trust.
Fees related to the credit redemption plus cash
First of all, you must remember that there must be a gain of points on the interest rates of the new credit concerning the total amount of credit to be repurchased, otherwise, the credit repurchase will only plunge you into a financial abyss. Readjusting your repayment terms is tantamount to alleviating your financial problems and possibly benefiting from cash flow, but there are fees to be paid to do so. First, look for a contract where the financial institution offers to buy back credit without IRAs, i.e. without early repayment indemnities. That’s one fee less. You also need to be aware of the guarantee fees estimated at 1% of the amount of the loan or credit repurchase. The guarantee can be a bank guarantee or a mortgaged property. There are also fixed or percentage application fees (about 1% of the loan amount) and also brokerage fees (1% on average). Caution: never forget the borrower’s insurance, which is part of the fees to be paid
The credit repurchase allows you to apply for additional cash flow.
Following your request for a credit repurchase, the bank may propose or grant you an amount for a new project. You can call this a “treasury”. This cash flow represents an amount added to the remaining capital due so that you can finance a new project without having to take out a new loan. In principle, this cash flow is requested in conjunction with the loan purchase. Besides, the credit application forms provide for this question of adding additional amounts to complete the feasibility study. The bank may refuse this cash request, depending on your financial and repayment capacity. The bank will also consider your cash employment program. This is the application with supporting documentation.
The basic supporting documents for the request for redemption of real estate loan plus cash flow
You have a chance to get a positive response if your supporting documents are complete and admissible. These documents vary depending on the financial institution. The most important thing is that they can justify your ability to repay. They are therefore used to validate your file. Supporting documents may include a rent receipt for a tenant, the monthly mortgage payment, the RIB, statements of account, proof of salary, amortization tables for all your current real estate loans, and loan offers for your personal and/or consumer loans, etc. If you simply want to obtain an estimate of the repurchase amount that could be granted to you, you don’t need to present any supporting documents, but simply your verbal declarations of current income and expenses. To do this, you can use online comparators.