Credit repurchase consists of grouping all its loans, both personal and real estate, contracted with one or more banks into a single contract. The repurchase of real estate loans is especially useful for those who have not properly calculated the risks of overindebtedness. In order to proceed, it is recommended to study ways of grouping loans with a single credit in each particular case, as this entails a significant cost due to interest and commissions among other associated fees.
What is mortgage repurchase?
The concept of mortgage buy-back is very simple to understand. It consists of grouping all the loans taken out from one or more creditors into one credit to save on the interest rate and other expenses. This financial operation can be a solution to get through a difficult period, but in some cases it can lead to even more difficulties (in the medium or long term) for a borrower who is already suffering from a fragile financial situation.
Many households accumulate payments on different loans, between real estate credit, consumer credit (car, travel, etc.), one can sometimes have difficulties to pay all the monthly payments. In this kind of situation, one of the solutions is to buy back credit at a better rate. Through this operation, you can group all your loans or bonds into a single monthly payment. This involves taking out a new loan combining all your previous loans with a better rate.
Thanks to mortgage repurchase solutions, it is generally possible to negotiate a better interest rate with your bank and thus save on monthly repayments. In addition, there is the convenience of having to pay only one loan each month. In this sense, it is possible to better control your finances by consolidating all your credits.
Why resort to a credit purchase?
The main objective of this type of loan is always the same: to save money and better control your personal finances. The banks and credit organisations that offer this type of financial transaction, make sure that they offer a second chance to borrowers who are in an unfavourable financial situation. Buying back home loans is a very advantageous option for people who, for one reason or another, pay several loans at the same time.
Of all the available loan consolidation formulas, home loan repurchase is the most widely used in France. In the case where several payments have to be made each month, with different interest percentages and different maturities, it is likely that credit repurchase is the best option. Not only in terms of savings, but also for the convenience of making a single payment.
Now that the concept of credit repurchase is clear enough, it is useful to take the time to understand how to go about consolidating your loans, because although this practice is becoming more and more common, not everyone knows how to do it. But before going any further, it should be noted that the best way to find out if buy-back is a viable option is to use a mortgage buy-back simulator.
How to take out a mortgage repurchase?
The repurchase of credit is contracted in the same way as a loan. The process is very simple, just make a request to the bank of your choice so that it can study your file and determine what is best for your particular case. With a credit redemption simulator, you can calculate your new monthly fees. There are different options on the market, including formulas to group all your loans together with better payment terms.
Repurchase of mortgage loans can be requested from banks and organisations specialising in loan products. As a general rule, it is recommended that you apply to the institution with which you have the most loans in order to pool all your loans. In this sense, if all your loans are taken out with the same bank, it is preferable to contact your banker to negotiate and obtain better loan conditions.
It is advisable not to resort to a home loan buy-back unless your debt exceeds 60% of your income and you find yourself in a situation that does not allow you to make the payments. In fact, the buy-back of credit should only be considered as a solution to the inability to pay. In this context, it is advisable to consult an expert capable of analysing your case and indicating the most favourable solution.