Interest rates applied to mortgages continue to fall. Indeed, despite a slight increase last spring, rates start again down since July. Given the current economic situation (low inflation, monetary policy stimulus from the European Central Bank …), this decline will no doubt be in the long run.
This low-interest rate is good news for future real estate buyers, who will be able to finance their investment by borrowing at a lower cost. This also represents an opportunity for those who have a current home loan. So, it’s time to renegotiate your loan terms with your banker. Currently, this query is commonplace. Most of the time, you will get a proposal from your bank advisor.
In parallel, you can solicit the competition as part of a loan buyback. The main interest of the renegotiation is the circumvention of the costs generated by a new loan offer (credit redemption by the competition). If you accept the renegotiation offer made by your banker then you will benefit from a lower interest rate on your mortgage, with a positive impact on the duration or the amount of your monthly loan. The costs to be incurred in the context of a renegotiation are less than in the case of a repurchase of real estate credit by the competition. Nevertheless, the competition will probably offer you better conditions, ie a lower interest rate. For you to earn money, it takes on average one point difference between your current rate and the proposal of the competition.
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Conversely, it should be noted that the last part of repayment (the last third, the last seven years for a loan of 20 years), the majority of the remaining periodic repayments consist of capital since the amount of interest is declining. In other words, we advise you more renegotiation if there is little amortization year.
Finally, think about comparing the costs associated with a credit buy-back by the competition. In fact, assume that the bank will ask you to house your income and savings in parallel with this credit redemption. It is therefore essential to know the costs associated with current operations and services (checking account, credit card, transfers or even insurance).